Overcoming growth risks with more relaxed environment

The Chinese economy saw further signs of a slowdown and worsening deflationary pressure in 2014. Growth has leveled out at just above 7 percent, which may be high by international standards but it has raised concerns that it may not be the new normal.

China's producer price index (PPI) has been on the retreat for the past 34 months, reaching an average of minus 1.8 percent from January to November year-on-year. The drop was driven partly by a sharp fall in global oil prices. Its consumer price index was down from 3.2 percent a year ago to 1.4 percent in November. And the housing price index for 70 major cities declined from 9.6 percent in January 2014 to minus 1.3 percent in September and minus 2.6 percent in October. As a result, the confidence level of investors and companies appears to be at its lowest since 2007.

There are worries that China's growth could decline even further if reforms and macro policies do not yield the expected results on time.