“Excess liquidity in the system is planting the seeds of surging inflation and asset bubbles,”

“Excess liquidity in the system is planting the seeds of surging inflation and asset bubbles,” Diwa Guinigundo, the Philippine central bank’s deputy governor, said in an interview in his office in Manila today. “More and more, China is realizing they have to moderate public spending, or else they will have the problem of high inflation later on.”

The central bank on Jan. 12 increased banks’ reserve requirements for the first time since June 2008 and has also guided bill yields higher at auctions this year.

China’s economy expanded a more-than-forecast 10.7 percent in the fourth quarter from a year earlier, the fastest pace in two years, adding to the case for policy makers to pare back stimulus measures.

Residential and commercial real-estate prices in 70 cities increased 7.8 percent from a year earlier in December, topping a 5.7 percent gain in November.

Values of some luxury units in Shanghai doubled last year, Lee Wee Liat, an analyst at Nomura International Hong Kong Ltd., said in an interview this month. He cited 100,000 yuan ($14,600) per square meter sales in December at Casa Lakeview, a project developed by Hong Kong billionaire Vincent Lo’sShui On Land Ltd.

China property sales also jumped 75.5 percent to 4.4 trillion yuan last year, led by the eastern cities of Zhejiang and Shanghai. The boom follows an unprecedented 9.59 trillion yuan of new loans being extended last year, flooding the economy with cash.