China will not be troubled either by inflation or deflation during the later half of this year as it was in the first half year, a spokesman for China's National Bureau of Statistics (NBS) said Wednesday.

NBS Spokesman Zheng Jingping said China's macro-economic performance and its monetary supplies in the first six months of 2005 were harmonious without any major problems.

Addressing a press conference, he said that the outstanding M2 -- the broad measure of money supply -- grew year-on-year by 15.7 percent during the first half of this year.

Loans released during the period totaling 1.45 trillion yuan (about 174.7 billion US dollars), up 13.3 percent, or 24 billion yuan (some 2.9 billion US dollars) more than the same period of last year.

"Therefore, it is hard for me to say there is such a problem as deflation, and economic trends show no signs of such problems" in the coming months of this year.

The People's Bank of China, or the central bank, said last week that the outstanding M1, or the narrow measure of money supply, rose 11.3 percent in the first half of this year. Money in circulation went up 9.6 percent.

China has set a 15 percent target for money supply growth in 2005 to fuel its rising economy on one hand and rein in the growth of some overheated sectors on the other.

The spokesman described the CPI growth rate for the past six month as relatively moderate with structural imbalance.

China's consumer price index (CPI), an important index for inflation,in the first half of this year rose by 2.3 percent, lower than the 3.6-percent level for the same period of last year.

The price index of fixed asset investment rose 1.7 percent, but the producer prices for industrial products grew by 5.6 percent year-on-year, and the purchase price for raw materials, fuel and power rose by 9.9 percent, and housing prices went up by 10.1 percent, he said.

The indices are rather high, and those who believe deflation emerged in China or will soon appear can hold water, he said.

He predicted the CPI growth in the coming few months will remain moderate.

"There will not be such a scenario that CPI will go down, or at least it is less likely it will decrease.

In my view, the producers' prices for industrial goods, and raw material, purchasing prices of fuel oil will maintain relatively high growth rates," he said.

Good summer grain yields in China will lead to very limited growth in food prices, he acknowledged. Food prices normally account for one third of China's CPI index.

Fierce competition on the consumer products market due to China's strong supply capability will also help both the consumer product prices and the CPI grow at a moderate pace.

But he cautioned that some factors contributing to CPI growth still exist, such as high crude oil prices on the international market, and rising prices of housing, water and power.

With a total population of 1.3 billion, the abundant supplies of cheap labor in China is also another contributing factor to the maintenance of China's low consumer prices, while the economy has been growing by an annual average of 9.5 percent since 1978.

China's GDP (gross domestic product) grew by 9.5 percent to 6.7422 trillion yuan (8,123 billion US dollars) in the first half of this year, and the growth rate was 0.2 percentage points lower than a year earlier, according to NBS figures released Wednesday.

(Xinhua News Agency July 21, 2005)