Economists allay fears over inflation

SHANGHAI: The chances of a widespread inflation occurring in China due to its loose monetary policy seem unlikely given the country's surplus production capacity, but the central government should be cautious against asset price bubbles generated by excess liquidity, renowned economists from the World Bank said on Friday.

"It will take years of robust economic growth to digest the current global overcapacity due to the financial crisis, and therefore, the government's injection of liquidity into the market will not bring about inflation in the short term," said Hans Timmer, head of Global Trends in the World Bank's Development Prospects Group (DECPG).

The prompt stimulus actions by the central governments have avoided the unprecedented financial crisis following the pattern from the Great Depression in the 1930s and 1940s, Timmer said at an Asia-Pacific Finance and Development Center conference in Shanghai.