...I have heard that the PRC is starting to see some inflation...
Inflation is rough there. From May 2011 to December 2011 the inflation on basic foods was up 5-10% in the same markets.
Isn't the interest rate also high out there?
The actual interest rate is indeed very high. But you'll have to know the right place to invest first.
A lot of people can't get loans anyway though. They borrow from family. I don't see many people getting loans as the housing market is slowing down in China. In Guangzhou they have cut some prices by 75%.