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Summary: The PBoC increased interest rates by 0.25% on 25th Dec in concern of inflation, which was the second interest hike in 2010 and confirmed that China has entered its interest hike cycle. At least two interest rate hikes and moderate credit control policies are expected in 2011. Although moderate inflation facilitates new home sales, the buyers' expectation of unilateral increase of property price would gradually change and the overdue adjustment of the property sector may come near 2012.