-Lu Lei, director of the People's Bank of China research bureau
The Chinese economy may slow this year as the country is facing the risk of deflation and sluggish demand undermine economic performance. The world's second biggest economy is seen growing between 6.9% and 7.1%, the head of China's central bank's research bureau said. Fixed asset investment growth is expected cooling further this year, affected by a sagging property market and a fall-off in state investment. Lu Lei, director of the People's Bank of China research bureau, also said that consumer inflation would also stay weak throughout this year. China's CPI climbed just 0.8% on year in January, after rising 1.5% in the preceding month. In 2014, China's economy grew at the slowest pace in 24 years of 7.4% due to sluggish export growth, weakening domestic demand, falling government investment and a spluttering housing market. In a n attempt to kick-start the economy, China's central bank cut the amount of cash that banks are required to hold as reserves for the first time in over two years earlier in February following interest rates cut for the first time in over two years as well in November.
Meanwhile, China managed to attract $13.92 billion of foreign direct investment in January, up 29.4% from the previous year and compared with $13.32 billion in December. Foreign direct investment is an important indicator of the health of the global economy and also shows where capital is flowing within the country.
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