China to grow at 8.5 pct in 2012: Central bank adviser

Inflation, which has nagged China for the past year, is likely to ease to about 3 percent from 4.5 percent in 2011.

DAVOS, SWITZERLAND: China is likely to engineer a soft landing with economic growth slowing to about 8.5 percent this year from 9.2 percent in 2011, Li Daokui, an adviser to the country's central bank said on Thursday.

Inflation, which has nagged China for much of the past year, is also likely to ease to about 3 percent from 4.5 percent in 2011, said Li, who sits on a board that advises the People's Bank of China.

"Anyone who has any understanding of China will agree that we will be able to achieve a soft landing," Li told Reuters on the sidelines of the World Economic Forum in Davos.

"Real estate prices will also ease slowly, which will help cool the economy and bring down price pressures."

China's inflation rate eased to a 15-month low in December to 4.1 percent, just ahead of market expectations, extending an easing trend of the last five months and raising expectations that the central bank may ease monetary policy.

Beijing has already begun cutting the ratio of cash banks are required to hold in reserves, in a move to boost corporate credit lines and help companies cushion falling demand at home and abroad.

Li also said he expects China's economy to be hit by the problems in the euro zone, although he said he was opposed to China buying Italian or Spanish sovereign debt.

"How are we going to explain to the Chinese people that we are going into it alone and buying up Spanish or Italian debt? A multilateral solution is needed, and China should work together with countries like Brazil or India to help Europe," he said.