Sept. 27 (Bloomberg) -- China's economic growth may slow ``moderately'' in the fourth quarter, economists from the State Information Center said, though overheating is still a risk.

``Indicators suggest economic trends are decelerating,'' economists including Wang Yuanhong wrote in a report in the official Shanghai Securities News. ``Overheating remains the biggest risk in the current economy.'' The center is affiliated with the National Development and Reform Commission.

China's economy expanded 11.9 percent in the second quarter, the fastest pace in 12 years, and inflation surged to a 10-year high of 6.5 percent in August. The People's Bank of China on Sept. 14 raised its key interest rate for a fifth time this year to curb an inflow of cash from a record trade surplus and to control investment growth and asset-price increases.

``The central bank may consider raising interest rates by more than 27 basis points each time if the current increases fail to curb,'' Jing Xuecheng, a former central bank adviser, said at a financial forum in Beijing today.

Fixed-asset investment, money supply and industrial output growth accelerated in August and remained in what the State Information Center economists called ``yellow or red-light zones.''

Growth in power generation slowed to 15 percent in August from 15.5 percent in July, the report said. Raw steel output growth slowed to 13.6 percent last month from 14.5 percent in July, according to government data. The report today didn't give a forecast for fourth-quarter economic growth.

The government should continue ``moderate'' interest rate increases to boost returns on household savings, the government economists said. It should also allow the yuan to fluctuate more against the U.S. dollar and appreciate against currencies other than the dollar to ease trade imbalances.

To contact the reporter on this story: Li Yanping in Beijing at yli16@bloomberg.net

Last Updated: September 27, 2007 01:13 EDT