(Xinhua)
Updated: 2008-05-25 09:26

The earthquake was expected to have an impact on inflation, as the jolted Sichuan Province and Chongqing Municipality in combination was a quite large area to produce food, said Subbaraman, who added the influence would not be as obvious as that of the snow storm months ago, though.

The severe winter in January and February had paralyzed transportation across south China, cut power grids and disrupted goods delivery, making prices surge to record high.

Ha noted the quake was negative for inflation in the short term but the effect was minor, as the gross domestic product (GDP) share of the quake-hit regions was only around 0.4 percent in the national total.

China's CPI growth would retreat to 5.5 percent year on year in 2008 and 2.8 percent in 2009, according to Lehman Brothers' forecast.

When inflationary pressure abates, the Chinese government should launch reforms in time to remove price controls on products like refined oil, said Gong.

China has imposed price ceilings on refined oil sold in the country despite soaring international crude prices to curb inflation and subsidized the profit-losing refiners.

Gong argued letting the market decide the prices of domestic refined oil would serve to restrain the strong demand, which has exactly contributed to higher world crude prices.

Meanwhile, global food and fuel price rises, which were considered to be passed on to domestic industrial products, would continue to pose risks of forcing up and spreading inflation in future, said Wang.

The producer price index (PPI), which measures the value of finished products when they leave the factory, rose 8.1 percent in April year-on- year, setting three-year highs for a fourth consecutive month.

The 8.0-magnitude earthquake that struck southwest China's Sichuan Province on May 12 had killed 60,560 as of Saturday noon, official statistics show.

By 7:00 p.m. Thursday, it had left more than 5.46 million rooms collapsed and more than 5.93 million others badly damaged in Sichuan, with roads, railways, bridges, water conservation facilities and factories devastated.

Fixed asset investment could be boosted by post-disaster reconstruction and support a stable economic growth in the second half of the year, said Gong.

China will see its annual GDP growth slow down to 9.8 percent this year and 8 percent in 2009, compared with 11.9 percent last year, according to the forecast by Lehman Brothers.

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