At a recent economic forum sponsored by the China Center for Economic Research, economists said overproduction in China's manufacturing sectors since 1998 and the expected overcapacity from over-investment in some sectors in 2003 and 2004 could lead to deflation in the second half of 2005. Wang Jian, deputy secretary general for the Economic Research Institute under State Development and Reform Commission, said the declining trend of the Consumer Price Index (CPI) and dropping corporate profits are indicators that China's economy is cooling.
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