China's economy surged 10.3 percent in 2010, spurred by a torrent of investment in property and other areas that also fanned politically volatile inflation.
Figures released Thursday by the National Statistics Bureau showed inflation moderating in December from a 28-month high in November as food prices eased, but analysts warned that was likely temporary.
They urged authorities to do more to rein in the lavish lending by state-run banks that is driving investment, a large chunk of which is believed to be in speculative property deals.
Investment in construction and other fixed assets shot up 23.8 percent over a year earlier in 2010.
That was a big drop from the 30.1 percent increase fueled by stimulus spending to counter the global crisis in 2009. But the economy remains too dependent on such investments, which many experts fear are inflating a potentially dangerous financial bubble and hindering moves to bring price increases under control.
The inflation rate was 4.6 percent in December compared with 5.1 percent the month before. That put inflation for the full year at 3.3 percent.
"A new wave of credit expansion is driving inflationary pressure, in both consumer prices and asset markets," IHS analyst Alistair Thornton said in a report issued after the economic indicators were released.
Inflation pressures, once confined to food, are now spilling into other areas, he said, characterizing moves to rein in credit so far as "timid."
By most of the usual measures, the world's second largest economy is doing just fine — especially when compared with muted growth in the U.S. and Europe. It grew 9.8 percent in the fourth quarter, up slightly from 9.6 percent in July-September but cooling from the torrid 11.9 percent growth seen in the first quarter of last year.
Retail sales jumped 18.4 percent in 2010 compared with a year earlier, while industrial output climbed 15.7 percent.
Yet China's communist leaders, acutely aware of the turmoil spun from past bouts of inflation, have proclaimed that curbing price increases is a top priority. They have hiked interest rates twice in the past four months and repeatedly tightened investment curbs to keep inflation from spreading throughout the economy.
Many analysts say the figures show authorities need to act more decisively to cool surging prices, especially as such pressures rise around the globe.
Following news earlier this week that the country's biggest state-run commercial banks splashed out nearly 240 billion yuan ($36.4 billion) in new loans in the first 10 days of the new year, the banking regulator again ordered banks to tighten risk controls.
Premier Wen Jiabao told the State Council, or Cabinet, on Tuesday that the government will focus on controlling food and housing costs, the official Xinhua News Agency reported. Authorities are also considering ways to penalize banks for flouting orders to cut back lending.
Borrowing for real estate development and other projects is the lifeblood for the sales by local governments of land use rights that provide a huge share of their revenues. Such sales rose 70 percent in 2010, helping push property prices 6.4 percent higher compared with a year earlier.
A huge pool of nonbank financing nearly doubled the amount of money available for investment last year, much of it "off balance sheet" lending whose exact scale is unknown.
"Because of the property bubble, risk exists almost everywhere in China's fragile financial system," says Yi Xianrong, an economist at the Chinese Academy of Social Sciences' Finance Research Center.