The Chinese central bank's recent interest rate hike can be interpreted as an important move to cool the overheated Chinese economy and guide it to a soft landing, said a China Daily's comment on Wednesday.

The People's Bank of China raised interest rates on loans by financial institutions to corporations and individuals for the first time in nine years. The central bank said it aims to restrain an excessive use of funds by businesses and lead the economy in the direction of sustainable economic growth.

Now that China has emerged as the world's seventh-largest economic power with year-on-year growth rates approaching double digits, sustainable and steady growth is essential for the world economy - not to speak of the Chinese economy itself.

The Chinese Government and the central bank have acted correctly in resorting to a concrete monetary measure. This is to restrain the excessively robust state of the Chinese economy in addition to their earlier administrative directives for less investment in plants and equipment in some industrial sectors, and for less lending.

The Chinese economy registered an annualized growth rate of 9.1 per cent in real terms during the July-September quarter - far above the 7 per cent level considered to be a benchmark for sustainable growth. As year-to-date fixed asset investment has soared by nearly 30 per cent from a year earlier, the corporate goods price index of the People's Bank recorded a year-on-year jump of 9.6 per cent in September, while the consumer price index for the month rose 5.2 per cent.

The People's Bank kept interest rates unchanged for such a long period out of concerns that higher rates would have a negative impact on the economy.

The recent increase was a modest one - the benchmark rate on one-year yuan loans was raised by 0.27 percentage point -prompting some analysts to doubt the effectiveness of the tight credit policy in cooling the economy.

But the majority reaction was that the People's Bank, overcoming its own fears about a negative impact, displayed its strong determination to combat overheating by opting to raise interest rates for the first time since 1995.

Crude oil futures in the West plunged late last week in the wake of the Chinese interest rate increase, which market participants expect to result in decreased oil consumption in China due to a slowdown in its economy.

Nevertheless, the effectiveness of the Chinese central bank's move will be short-lived unless it takes bold new measures. Further interest rate increases and a stricter hand to rein in investment should be applied.

Can the Chinese economy make a soft landing? The abilities of the Chinese Government and the People's Bank will be really tested from here on in.