China may face deflation, if a weak domestic demand is sustained. This opinion was voiced by the director of the research division of the People's Bank of China, Lu Lei, writes MarketWatch.
China's economy this year will grow by 7.1%, but the increase in consumer prices will reach 1.8%, experts predicted.
During the period of 2014, GDP of China has increased by 7.4%, and this was the weakest dynamics since 1990. The 2015 target for GDP growth in China is set at the level not less than 7%.
Consumer prices in China amounted to 2%, and at the end of January 2015 the inflation rate slowed to 0.8% compared to January 2014.
Mr. Lei said that further long-term growth of the Chinese economy lacks incentives. For example, currently the manufacturing sector is experiencing problems due to the loss of competitive advantage and overproduction.
The Chinese government should adjust its policy according to the further development of the situation, experts claimed.
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