China's continuously falling retail prices might rebound by yearend with the national economy growing steadily at an annual seven percent this year, a senior official said in Changchun on January 12.

Wang Mengkui, director of the Development Research Center of the State Council, expressed his upbeat outlook for the future of the economy at a national working conference in the capital of northeast China's Jilin Province.

"China's economy is in an upswing out of the current difficulties," Wang said.

The year 1999 saw the fast recovery of China's export, an overall improvement in performance of state enterprises, a reducing stockpile of industrial products, and a slowdown of declining prices which lasted for more than two years.

In light of these promising signs, the retail prices, an important index for the judgement of deflation, will stop dropping by the end of this year and may pick up afterwards, according to Wang.

Nevertheless, this year's economic growth will be affected by such negatives as the small increase in infrastructure investment at the end of last year.

Wang estimated that China would continue its expanding fiscal policy in 2001 in spite of these factors.

China has adopted pro-active fiscal policies since 1998 through issuance of extra treasury bonds to increase investment, attempting to maintain a steady economic growth by stimulating domestic demand.

Although the proportion of national debt in China's gross domestic product(GDP) is still smaller than the world's average, it now accounts for a considerable part of the state budget and keeps growing at a high speed.

The expanding fiscal policy is a short-term approach which will not last long, said Wang, adding that the development research center will carry out research into prevention measures that will ward off potential risks.

"Under the current favorable international and domestic environment, it is doubtless that China will keep its annual growth rate at seven to eight percent in the next decade," Wang said. (Xinhua)