Despite a slowing economy, China is unlikely to experience deflation next year, according to Fan Jianping, chief economist at the State Information Center.

The typical signs of deflation include a staggering economy and drops in money supply and the Consumer Price Index.

China will see slower CPI growth next year and even several months of negative growth of the Producer Price Index, the factory-gate measurement of inflation, due to falling prices of energy on the international markets.

Fan added that China's economic growth could stay above 8 percent next year, compared with a World Bank forecast of 7.5 percent and the International Monetary Fund's 8.5 percent.

China's CPI growth eased to a 17-month low of 4 percent in October. In February, the figure was at a 12-year high of 8.7 percent.

The sharp fall triggered concern about deflation.

Earlier, Peng Ken, a Citigroup economist, had said: "Inflation continued to moderate in October. Coupled with PPI waking up to the collapse in global commodity prices, deflationary pressures picked up notably in October."

China increased the state minimum purchase price of rice and grain earlier this year. Together with the planned reform of energy prices, there would be little possibility of sharper falls in the CPI, Fan said.

With the country shifting to an expansionary policy, China's economy would be able to sustain a growth of around 8 percent next year.

(Shanghai Daily November 27, 2008)