In FEER, Jonathan Anderson writes:

As long as most of us have been watching the Chinese economy, there’s rarely, if ever, been a dull moment. And the past few years in particular have resembled nothing so much as a roller-coaster ride: from rampant overinvestment to a sharply rising trade surplus; from property bubbles to a stock market bubble and back again, and the list goes on.

What's the biggest economic topic for 2008? In a word, inflation. From absolute obscurity only a few quarters ago, inflation has come raging forward to command the full attention of domestic policy makers, global investors and even casual observers as “the” issue of the moment.

For seven years following the bursting of the 1990s bubble the Chinese economy was in outright deflation, as the resulting overhang of capacity decimated commercial profits and pricing power and forced final goods and services prices down. As late as January 2004, the official consumer price index was no higher than it had been in July 1997. Prices finally began to rise on average during 2004, increasing at an annual pace slightly above 2% for the next three years, and economists and policy officials generally heralded China’s return to a more normal, “healthy” inflation environment. 

To read more:

http://feer.com/articles1/2008/0803/free/p020.html?Pricing_In_China’s_Inflation_Risk