They said that the move implies the Central Government is moving away from administrative methods to market-based economic tools in reining in the overheating economy.

Mainland financial authority announced Thursday that one-year benchmark lending and deposit rates will be raised from Friday by 0.27 percentage points to 5.58 percent and 2.25 percent respectively.

The five-year deposit rate was raised by 0.81 percentage points,exceeding a 0.36 point rise in the five-year lending rate.

Experts said that it is to curb the outflow of deposits in favor of investment in sectors such as property, where third-quarter prices saw double-digit growth, said Friday's South China Morning Post.

Some believe that it is also partly a reaction to the large amounts of deposits leaving the banking system in favor of other assets.

Tao Dong, chief China analyst with investment bank Credit Suisse First Boston, deemed that around 120 billion RMB yuan (14 billion US dollars) is flowing in the non-official system, which is equivalent to 10 percent of gross domestic product and 0.5 percent of credit in the banking system. He said the size of this rate rise is too small to damage the economy.

In the relevant development, Joseph Yam, Chief Executive of Hong Kong Monetary Authority, said Friday that it is positive stepon track of mainland exchange rates adjustment.

Hong Kong financial secretary Henry Tang said the Chinese interest rate hikes is a positive move on the part of the central bank.

He told reporters that the mainland's macro-economic control had achieved preliminary results, and if this persist, it would benefit Hong Kong and the global economy.