A high-level Chinese official on Sunday made the government's first admission that the country's economic slowdown was not going as planned.

China's top banker, Zhou Xiaochuan, told a meeting of regional leaders that his country's growth rate had tumbled "a bit too much."

"China's inflation is also declining, so we need to be vigilant to see if the disinflation trend will continue, and if deflation will happen or not," said Zhou, governor of the People's Bank of China. His remarks were made at the Boao Forum for Asia, an annual conference on the island of Hainan in southern China.

Zhou added that China could "have room to act" by taking "quantitative measures" and setting interesting rates.

For many, the way he described China's health was no surprise. The country's economy has not been growing this slowly since the 1990s. Debt-laden corporations are seeing sickly profit margins. Banks are carrying loads of debt, too, and the housing market is slowing.

China's official 2015 GDP growth target is 7%, but that seems shaky.

Zhou's admission is a big deal

Acknowledging that significant intervention has to be on the table is a big deal for China. Everyone has known for years that this slowdown was coming because the government is purposely transitioning its economy from one based on foreign investment to one based on domestic consumption. It is a brutal process, but the government knows it is the only way the country will become the self-sustaining superpower it wants to be.

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Until now, while the Chinese government had acknowledged the slowdown was rough, it had assured the world that the situation was under control. Just a few weeks ago, Chinese officials were saying they would be monitoring deflation but still were not that keen on intervening with policy measures.

Now it seems they are warming to the idea. In January, China's headline consumer price inflation hit 0.8%, then it bounced back up to 1.4% in February. March probably isn't looking that great either from the People's Bank of China's vantage point.

"Widening PPI deflation and soft CPI inflation, especially after adjusting for seasonal effects, point to persistent deflation risks," Barclays wrote after February's number came out. "In our view, the monetary policy needs to be more 'proactive' in order to deal with the cyclical challenges in the near term."

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The problem with deflation is that it signals the country is strapped for cash. That's really dangerous for China because the country has so much debt in its financial system. If you don't have cash, you can't pay interest on that debt, and you have a serious problem.

Xi's anticorruption campaign is a huge economic impediment

Another issue at play here is President Xi Jinping's anticorruption campaign. The country's superrich are scared to spend. High-level officials and businessmen are going to jail. And all of it is disrupting the way business has been done in China.

What's more, many analysts see the drive more as a way for Xi to consolidate power than a way to make China more modern and transparent.

But Xi doesn't care about any of that. Using state media, he has made it clear that any suggestions that his anticorruption campaign is hurting the economy will not be tolerated. And China's central bank is going to have to figure out another way to get more cash flowing through the economy. The drive will go on.

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