CHINA'S inflation rate so far exceeds the deliberately cautious six per cent estimate for the year set out by Prime Minister Mr Li Peng to the National People's Congress last month. That in itself comes as no surprise. With last year's growth running at an annual rate of 12.8 per cent and the economy expanding even faster this year, Mr Li's inflation figure and the accompanying growth projection of eight per cent were universally recognised as political posturing rather than realistic estimates. What is more worrying is just how high the officially recognised rate of inflation has now gone. At 15.7 per cent in the major cities, it is the highest since 1988. While the national retail price index is said to be up only 8.6 per cent, it will only bea matter of time before urban inflation spreads to the more remote areas. Even in the towns, where not everyone is a successful entrepreneur or working for one, inflation can cause hardship. The smashing of the iron rice-bowl is putting millions out of work even as it improves the income of those still at work. Mr Li, by instinct a central planner with a cautious approach to growth and reform, is known to be concerned that the Deng Xiaoping-inspired push for growth will overheat the economy. Having ceded much of his economic control to his rival Mr Zhu Rongji and toed the Deng line, the Prime Minister has found it impossible to meet the prescriptive, low-growth targets he desires. Even if Mr Li Peng were politically positioned to demand a return to the economic retrenchment policies of the late 1980s, it is doubtful whether Beijing still has the means to control runaway growth. The central government has progressively lost the authority and the means to impose tight fiscal restraints on the regional governments and individual enterprises which are to blame for much of the spending. Most have their own lines of credit from Hongkong or overseas and are no longer dependent on central coffers. They can afford to thumb their noses at economic conservatives in the capital.