CHINA'S economy will continue to grow steadily into the next century but inflation and grain production will remain latent worries in the country's march to prosperity, a report says. The report is the first of a series of biannual publications on China's economy by Salomon Brothers. It carried views and forecasts by four leading academic and government economists. Lawrence Lau, Professor of Economic Development at Stanford University, said China would grow steadily at an average of 9 per cent a year from now to 2020. He said: 'Assuming the maintenance of peace and political stability in China, along with the continuation of economic reform policies by the administration, we forecast the long-term growth of the economy to continue beyond 2020, with inflation, gross domestic product (GDP) growth and real GDP per capita improving.' Real GDP would reach US$5.5 trillion (based on 1990 prices, excluding inflation) and real GDP per capita $3,500 by 2020. After peaking last year at 24.1 per cent, year-on-year, inflation would start a slow but steady decline this year to about 7 per cent in 2020. Mr Lau believed heavy industry would outpace other sectors to become a dominant sector in the country while construction, transport and communications sectors would have slightly above average growth. 'The real laggard is agriculture, which is projected to grow a full 4 percentage points slower than aggregate real GDP. This slow growth rate is not significantly lower than its historical performance,' he said. Han Jun, associate professor at the Institute of Rural Development of the Chinese Academy of Social Sciences, said China had to increase its domestic production of grain if it was to reduce its reliance on imports. 'In the years to come, the demand and supply of grain will remain a fragile equilibrium, with the government trying hard to increase domestic production to avoid massive imports,' he said. He said measurements of inflation were sensitive to rapid food price movements but the surge in grain prices was not the main cause of periods of high inflation. As the country underwent a process of structural transformation, the importance of agriculture to the economy would keep falling, as did its influence on inflation. Senior research fellow Wu Jinglian said there continued to be strong underlying inflation pressures despite the drop in price index. He said the key to the inflation problem was the greater use of economic policies and acceleration of reforms. Salomon's chief regional economist Andrew Freris expected China to have an average GDP growth of 9 per cent in the next 25 years. The US investment house remained upbeat about the short and longer-term prospects of the economy. Mr Freris said China was ready to ease its credit control after three years of efforts to pull in the economy.