IT'S A DEFLATIONARY EPOCH:

Strategist Vincent Chan at Aletheia Capital speaks for many when he warns that China is at the "borderline of deflation."

That same goes for analyst Kelvin Wong at OANDA. "To address this ongoing growth slowdown in China that may lead to a deflationary spiral, which in turn can potentially trigger an adverse impact on countries that export goods and services to China such as Singapore, the Chinese central bank needs to switch away from its current conservative stance to loosen its liquidity tap further to stimulate growth," Wong argues.

Long-time Japan observers may detect some troubling echoes as Fu Linghui, spokesperson for China's National Bureau of Statistics, insists that there's "no deflation" in the economy. And if there is, it's "transitory."

This last word might trigger PTSD from similar assurances emanating from Tokyo in the late 1990s. Or their mirror image -- "don't worry, inflation is transitory" -- coming from Washington these last two years.

As Nikkei Asia points out in an investigative report this week, consumer prices in mainland provinces Jilin, Shanxi, Guizhou, Liaoning, Anhui, Henan and Shanghai turned negative in April. Data from Chinese research company Wind Show corroborate Nikkei's findings.

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