China facing deflation risk

One of China’s most prominent economists Cai Hongbin, has warned of the risk of deflation in China as the world’s second largest economy faces severe downward pressure this year.

Professor Cai, the head of Peking University’s Guanghua School of Management told a forum in Beijing the Chinese economy is lacking in dynamism with lacklustre demand and sluggish consumer price growth, according to Caixin.

China’s consumer price index has been hovering around two per cent for the last four years and is expected to fall further this year. During the first two months of year, consumer pricea increased only 1.1 per cent.