An official with the National Bureau of Statistics (NBS) has said falling consumer prices indices in China will not lead to a drastic economic slowdown because demand remains high.

Zheng Jingping, spokesman for the NBS, said rapid growth of supplies and improved productivity are the reasons for falling prices or slower and fewer price hikes in China, which is good for the economy.

In an article published yesterday in China Securities Journal, Zheng wrote that China's consumer price index (CPI) has been going down in the first three quarters of this year. It grew by 2.8 percent in the first quarter, 1.7 percent in the second, and 1.3 percent in the third.

Zheng added that China's CPI rose by 2.0 percent year-on-year in the first three quarters of this year, a decline of 2.1 percentage points compared with a year earlier.

Economic globalization, an abundant supply of cheap labor, low capital investment, and artificially low commodity prices are also responsible for the country's falling CPI, he said.

China's strong supply capability - a result of the country's massive investment in the manufacturing and processing sectors - and fierce competition in the consumer products market help consumer product prices and the CPI grow at a moderate pace.

China's loose environmental protection mechanisms also help producers reduce costs. Manufacturers have to pay little to cut the emission of waste, polluted water and gas.

In addition, the prices of oil, natural gas, electrical power are some of the products whose prices are set by the Chinese government, are much lower than international prices.

(Xinhua News Agency November 2, 2005)