BEIJING - China's central bank governor, Zhou Xiaochuan, said Friday that the country would promote liberalization of interest rates during the next five years.

China will make "obvious progress" in interest-rate liberalization during the 12th Five-Year Plan period, which runs from 2011 to 2015, said Zhou, head of the People's Bank of China (PBOC), at a financial forum in Beijing.

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Pricing was a key part in the liberalization of interest rates, Zhou said.

Lenders with the best ability to monitor risks should be given more freedom to set rates according to market conditions, ahead of those without sufficient ability to monitor risks, Zhou said.

China's inflation climbed to a 28-month high in November at 5.1 percent. This month the government pledged to shift to a proactive, stable, prudent and flexible macro-economic control in 2011.

The central bank raised reserve requirements for lenders for the third time in five weeks on Dec 10, while refraining from adding to October's interest-rate rise, China's first since 2007.