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China 'not facing deflation'
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By He Shan
China.org.cn staff reporter

China's February consumer price index (CPI) fell into negative territory for the first time in six years, raising concerns among CPPCC members about deflation and falling consumer demand for a host of goods and services.

The National Bureau of Statistics reported on March 10 that the February Consumer Price Index fell to minus 1.6 percent year on year, reinforcing the downward economic trend.

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Yan Qingmin, director-general of Shanghai Office of the China Banking Regulatory Commission.

"Prices will probably stay flat or continue to fall this month," said Yan Qingmin, director-general of Shanghai Office of the China Banking Regulatory Commission. "But it is too early to say if China is falling into deflation."

He predicted the deflationary trend would be reversed by the impact of the stimulus package.

"It will take time for the economic stimulus package to take effect. That's just an economic law," he said.

In January, the Chinese banks loaned a record 1.62 trillion yuan (US$238 billion), considered a sign that sufficient liquidity has been injected into the market to stimulate the economy.

"Currently, the most urgent task is to find a new growth sector," said Yan.

To some people, falling prices have a silver lining.

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