The consumer price index in China is up 5.4 percent, the highest increase in three years. A food market in Beijing.

SHANGHAI - As the United States and Europe struggle to get their economies rolling again, China is having the opposite problem: figuring out how to keep its revved-up growth engine from generating runaway inflation.

The latest sign that things were moving too fast came on April 17 when China’s central bank ordered the biggest banks to set aside more cash reserves. The move essentially reduces the amount of money available for loans, and is an attempt to cool down the economy. It follows the government announcement that China’s economy was growing at an annual rate of 9.7 percent, by far the strongest performance by any of the world’s economies.

Because China is now the world’s second largest economy, after the United States, and because the country has been a leading source of global growth during the last two years, money problems here can reverberate in the world beyond.

High inflation endangers China’s status as the low-cost workshop for the world. And if the government’s efforts to fight inflation cause the economy to stumble, that will cloud the outlook for international businesses that have been counting on China for growth.

“The roots of inflation were laid down after the financial crisis, with the stimulus policy,” said Zhang Weiying, a professor of economics at Peking University. After a big stimulus, stamping out inflation is not easy, Professor Zhang said. “It may take a long time.”

Inflation also poses a threat to social stability, a particular worry for Beijing, especially since authoritarian governments in North Africa and the Middle East have faced uprisings.

Food prices are soaring, and the government said on April 15 that the consumer price index in March had risen 5.4 percent, its sharpest increase in three years. Hoping to tame inflation, in the last six months Beijing has tightened restrictions on bank lending and raised interest rates on loans and deposits .

The government has also increased agricultural subsidies to curb food prices, and tried to forbid some companies from raising prices. These efforts stand in contrast to those in the United States, where inflation is low (the underlying annual inflation rate was 1.2 percent last month) and where the debate centers on how much to stimulate the economy given the size of the deficit.

Inflation is also running low in Europe, where some countries are imposing harsh austerity measures to pare their budget gaps.

Analysts say the results of China’s economic management have been mixed.

Growth has begun to moderate from its torrid pace of about 10 percent annual growth but inflation has become worse.

For example, housing prices continue to climb even though Beijing has long promised to curb the property market and to spend billions of dollars over the next few years on affordable housing.

The average apartment in central Shanghai now costs more than $500,000. Even in Chengdu, in central China, the price of a typical home costs about 25 times the average annual income of residents.

Analysts also say too much of the country’s growth continues to be tied to inflationary spending on real estate development and government investment in roads, railways and other multibillion-dollar infrastructure projects.

China’s boom began in early 2009, during the global financial crisis, when Beijing moved aggressively to increase growth with a $586 billion stimulus package and record lending by state-run banks. The loose monetary policy, and big investments in local government projects, did revive growth.

But even at the time there were already concerns about soaring property prices, undisciplined bank lending and the huge debts being amassed by local governments.

The fear among some experts is that the bubble will eventually burst, leading to a wave of nonperforming loans at the big state-owned Chinese banks, which have been the main financiers of the nation’s phenomenal growth dating to the economic reforms in the 1980s.

The government has raised minimum wages in the hope of reducing the big income gap between the rich and the poor, and the urban and rural. But higher wages drive up the costs of production, leading to higher prices.

“China is moving into a new era, a new norm,” said Dong Tao, an economist at Credit Suisse in Hong Kong. “In the previous decade, inflation was about 1.8 percent a year; in the next decade, it may be closer to 5 percent.”

As wages and production costs rise, coastal factories are demanding higher prices for the goods they ship overseas. That means buyers will have to pay more for those goods or seek lower-cost suppliers elsewhere. In some cases, retailers are bidding for goods at prices the exporters consider too low.

“I hear that many Chinese exporters are rejecting orders from Wal- Mart and other Western retailers,” said Mr. Tao. “I’ve been covering the Chinese economy for a long time, and I’ve never heard that before.”


By DAVID BARBOZA