China's unusually high lending growth last year has sparked differences among the country's top economists as the central bank seems to be taking new measures to contract credit and control inflation.

While many economists believe that control of credit is a must to prevent serious inflation and ensure stable growth, some hold that too drastic a contraction could lead to stagflation.

"Currently the government shouldn't steer off the easy monetary policy track to avoid possible stagflation, which is symbolized by not only inflation but high unemployment," said Li Yining, professor and dean emeritus of Guanghua School of Management of Peking University.

China may get stuck in stagflation even with a mild GDP growth like 6 percent year-on-year, given the huge unemployment pressure caused by its large population, said Li, one of the most influential economists in China.

He made the remarks on the 11th annual China economic forum held by the school.

He warned that too early an exit strategy could affect employment and increase the possibility of stagflation at a time when the country's economic recovery is still not solid enough.

China initiated a massive 4-trillion yuan ($586 billion) stimulus package in late 2008 to overcome the fallout of the global financial crisis. Its new lending was expected to amount to 9.5 trillion yuan in 2009, almost double the previous year. The ample liquidity, while helping the country meet its GDP growth target of about 8 percent in 2009, has triggered concern that the menace of serious inflation may loom large this year.

Zhang Weiying, economics professor and dean of the Guanghua school, warned that excessive credit expansion and low interest rates are the root of all financial crises in history and cause high inflation and massive toxic assets.

"We need to notice that this round of credit surge (in China), boosted by the 4-trillion-yuan stimulus plan, comes on the back of continually strong economic growth for many years," said Zhang. That means the scale of credit last year was exceptionally large.

The People's Bank of China, the central bank, raised the 3-month central bank bill issuing rate last week - for the first time since August 2009 - by 4 base points to 1.3684 percent.

The move, which was accompanied by the biggest weekly net drain from money markets in 11 weeks, prompted concern that the central bank could be heading for policy tightening and may raise benchmark lending rates in the coming months.

But Li said he believes that economic restructuring, which will make the Chinese economy less investment-dependent, more consumption-driven and energy-efficient, is more important than control of credit expansion.

"Readjustment in the economic structure is the key," he said.