China needs to raise interest rates further to rein in inflation, which is likely to stay high in coming years due to rising global commodity prices, Li Daokui, an adviser to the People's Bank of China said on Monday.

But Li, an academic member of the central bank's monetary policy committee, cautioned against raising interest rates too quickly as that could lure more hot money into the country.

China is a unique and huge economy and too much attention is upon our economy, so the interest rate has to be carefully managed. If the interest rates are too high, there will be much hot money inflows, he said at an economic forum.

The world's second-largest is likely to grow 9.3-9.4 percent in 2011 despite policy tightening, and will retain an average 9 percent growth over the next five years, said Li,

China has entered a new stage of reasonably fast growth, and I think the economy will maintain fast growth in the coming five years, he said.

A survey of economists showed they broadly expect the world's second-largest economy to expand 9.5 percent in 2011, slowing slightly from 10.3 percent last year.

China has lifted bank reserve requirements eight times and raised interest rates four times since October in a bid to put a lid on rising prices even after signs that the economy was slowing down.

Li also said China's narrowing trade surplus could help ease foreign pressures on the country to let the yuan rise at a faster clip.

China posted a trade surplus of $11.4 billion in April as exports hit a record while imports eased more than expected, swinging back from a trade deficit in the first quarter.

But higher import costs, along with the government's efforts to rebalance the economy in favor of domestic consumption to reduce its reliance on exports, could lead to a smaller trade surplus for 2011 from last year's $183 billion.

The China Securities Journal on Monday quoted Li as predicting that China's trade surplus will fall to $100 billion-$120 billion this year.

(Reporting by Aileen Wang and Kevin Yao; Editing by Ken Wills)

China Inflation