source: http://uk.reuters.com/article/marketsNewsUS/idUKPEK32781820090223The Party's Politburo -- a policy-setting council of 25 senior officials -- reaffirmed that the government will seek to "enhance the role of domestic demand in promoting economic growth", as export demand slows, according to an official account of the meeting issued by the Xinhua news agency.
The People's Bank of China (PBOC) made the assessment in a quarterly monetary policy report issued on its Web site (www.pbc.gov.cn).
"At present, the power to push prices up is weak, and the downward pressure is relatively strong," said the Chinese-language report. "Deflation risks are relatively big."
The Chinese central bank said international prices for raw materials were still falling, and there might be over-capacity at home, stoking deflationary risks in the shorter term. The report did not specify how long it saw those risks lasting.
China's consumer price index rose only 1.0 percent in the 12 months up to January and its producer price index fell 3.3 percent in the same month, triggering deflation worries.
The central bank said the Chinese economy faces increasing international downward pressure that may slow growth.
"External demand is shrinking, overcapacity in some sectors is surfacing, companies are finding difficulties in operation, and urban unemployment is rising," the central bank noted.