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Economist allays fears of inflation

CHINA'S rapidly expanding loans won't lead to inflation, at least within this year, according to the chief economist at the National Bureau of Statistics.

"Two elements will contain risk of inflation this year. One is the excessive production capacity which keeps consumer prices running at low levels. The other is the still tough situation in employment," Yao Jingyuan said, the China Securities News reported today.

He said China's is not likely to see inflation this year and the major concern at the moment is still deflation. He did not provide details on unemployment.
China's Consumer Price Index, the main gauge of inflation, fell 1.4 percent from a year in May, the fourth consecutive monthly decline.

The Producer Price Index, the factory-gate inflation yardstick, dropped 7.2 percent last month on an annual basis, a record low following drops of 6.6 in April and 6 percent in March.

Despite the negative CPI and PPI, some institutions and analysts have warned about deflation.

Fan Jianping, chief economist at the State Information Center, a research unit under the National Development and Reform Commission, said earlier this month that the risk of inflation increased "significantly" in recent months because of the jumping prices of commodities in the global market and the rapidly expanding loans at home.


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