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Top banker: No deflation in China in 2009

By Diao Ying and Zheng Lifei (chinadaily.com.cn)
Updated: 2009-03-10 14:00

China will not face any risk of deflation this year as its economy is likely to recover in the second half and liquidity is abundant in the markets, a deputy central bank governor said on Tuesday.

Related readings:  CPI drops 1.6% year-on-year in Feb  China's GDP growth at 8 percent  China's central bank warns of near-term deflation  Adviser: No reason for China to fear deflation

"At present, the liquidity is sufficient and the new lending is growing briskly and the economy is likely to rebound in the second half," Su Ning said in an interview with China Daily.

As a result, deflation, in which falling prices are accompanied by shrinking loans and money supply and an economic recession, "will not emerge in China", Su said.

The country's CPI dropped 1.6 percent year-on-year in February, the first negative growth since December 2002, according to the National Bureau of Statistics (NBS) figures released Tuesday.

"We can't yet draw the conclusion that deflation has arrived," the NBS said in a statement, citing falling raw-material prices and one-off factors, including the timing of the Lunar New Year holiday and blizzards that pushed up food prices a year ago.