IN an attempt to quell concern over China's economic health, a senior official has predicted that the economy will not suffer from stagflation in the next few years. State Economic and Trade Commission deputy minister Chen Qingtai said Beijing's efforts to curb inflation and strengthen macroeconomic control had been effective in bringing the key economic gauges close to the official target. China had planned to keep inflation down to 15 per cent and economic growth to eight to nine per cent this year, compared with last year's frenetic increase of 21.7 per cent in the retail price index and 11.8 per cent in gross domestic product (GDP). Mr Chen's assertion was challenged by State Planning Commission economist Wang Jian who expected the downward inflationary trend would be reversed during the balance of the year. Xinhua (the New China News Agency) quoted Mr Chen as saying China continued to lead the world in economic growth this year, with a rise of 9.8 per cent for the first nine months, and was expected to grow at 10 per cent this year. The retail price index dropped to 11.4 per cent last month from the peak of 27 per cent in October last year. The index averaged 16.6 per cent in the first three quarters. Mr Chen said he was confident that China was about to realise its goal of a 'soft landing'. 'China will step up its efforts to curb inflation in the following period, ensuring a reasonable growth in its national economy in the meantime,' he said. There are concerns that the economy may fall victim to stagflation - simultaneous recession and high inflation - if the state continued with its austerity programme. Mr Wang, deputy director of the planning commission's economic research institute, said inflation could gather strength due to soaring food prices and increases in money supply. He said the basis for lower inflation had been weak, although the price situation had turned for the better this year. 'Prices for meat, poultry and eggs rose 6.8 per cent in August over the previous month after a 2.1 per cent rise in July over June,' Mr Wang wrote in yesterday's Economic Daily . Mr Wang was quoted by Xinhua as saying that stagnant grain production in recent years had seen a rise of about 30 per cent in grain prices since the beginning of this year, which, in turn, made pig and poultry farming a more costly business, thereby stimulating price rises for meat and eggs. Food prices rose 3.2 per cent in August over the previous month, whereas food prices dropped 2.3 per cent in July from the previous month. He said that another worrying factor came from the money supply. 'Usually half of the loans planned for the whole year should have been issued by the end of July,' he said. 'However, only 39.5 per cent of the loans had been issued by the end of August this year. 'A huge issuance of loans could help ignite a surge of inflation.'