Former deputy director of the Research Bureau under the People's Bank of China, Jing Xuecheng, said on Thursday that the central bank should consider a bigger interest rate rise to control China's excessive liquidity more effectively.

In the 2007 China Financial Derivatives Summit, Jing Xuecheng said China's economy was seeing excessive growth in fixed-asset investment, trade surplus and liquidity, while high prices for housing and the relative high CPI caused by excessive liquidity were also challenging.

Jing warned that serious attention should be paid to the high CPI, and the central bank should take more active measures to curb excessive liquidity and to avoid an overheating of the economy.

He said it would take time for the market to react to central bank's policies, such as lifting the rates. However, the effect of the several interest rate hikes this year has been limited.

He also called for more application of financial derivatives in the market to restrain liquidity and hedge risks.

Jing Xuecheng indicated that China's futures market was actually inadequate in liquidity. Diversifying products in commodities and financial future markets will channel more capital into the futures market, which may help to control the rising commodity price.

The 2007 China Financial Derivative Summit, organized by China Decision Maker Consultancy, was held in Beijing on Sep. 27-28, gathering financial experts and business insiders to assess the cutting edge development of the country's financial derivative market