Focusing on the new global situation, the political, business and academic elite from countries all over the world gathered on Jan. 21, 2015 at Davos, a small county in Switzerland, to discuss how to tackle new challenges in the world economy. However, western media complained that risks of deflation in China could undermine the international economy.

What is deflation? Although its precise definition will vary between different academics, effectively it means falling prices. China's GDP experienced a year-on-year increase of 7.4 per cent in 2014. Compared with the same period last year, consumer prices nationwide increased by 2 per cent in 2014. There is no sign of significant deflation in China's economy, far less any evidence that China is exporting deflation to the world.

Still affected by the international financial crisis, global market demand is experiencing a period of depression. Prices of global crude oil and basic metals are showing various levels of downturn. Meanwhile, China's exports are affected by weak prices of manufactured goods and daily necessities. The World Economic Outlook, released by International Monetary Fund (IMF), regarded deflation as the biggest threat to world economic recovery. The outlook also pointed out that world economic slowdown, inadequate economic demand and structural factors could lead to a global downturn.

While the west attempts to blame China for deflation, its main causes are lack of structural economic reform and a shortage of new growth points.

China has been a target of this kind of criticism for several years. In 2002, immediately after China became a member of the World Trade Organization (WTO), some western politicians and businessmen began to predict that China would be a strong force for deflation. In fact, developed economies including the U.S. and Japan have benefited a lot from China's high-speed economic growth in the past 10 years. Alan Greenspan, Chairman of the Federal Reserve of the U.S., said that China was not causing deflation in other countries.

From an international perspective, China's economy still enjoys high-speed growth. As economic structural adjustment and industrial transformation and upgrading proceed, the Chinese economy will achieve high quality, efficient and sustainable growth as well as create more opportunities for the rest of the world. Through actions and initiatives like the "One Belt One Road" proposal, Asian Infrastructure Investment Bank, USD-40-billion Silk Road Foundation and New Development Bank, China will increase its investment in developing countries and improve their quality of life. China aims to drag the world economy out of recession by virtue of foreign investment.

The international economy is experiencing a period of adjustment. Countries should work together and adopt reasonable economic policies to deal with the current problems.

The article is edited and translated from《全球通缩，不是一国的问题》， source People's Daily