China may face prolonged economic slowdown: BOJ official

Construction workers walk past an advertisement board in Kunming, Yunnan province, on Jan 25, 2015. -- PHOTO: REUTERS
Construction workers walk past an advertisement board in Kunming, Yunnan province, on Jan 25, 2015. -- PHOTO: REUTERS

MAEBASHI, Japan (Reuters) - China is facing risks of deflation and may suffer a prolonged period of economic stagnation given structural woes such as excess capacity and slumping property prices, Bank of Japan board member Takahide Kiuchi said on Thursday.

"Structural factors are pushing down China's potential growth," Mr Kiuchi told a news conference, adding that Beijing's new economic growth target of 7 per cent for 2015 was roughly in line with the country's potential growth.

Chinese policymakers are doing the right thing by avoiding excessive stimulus measures that could heighten financial imbalances, which shows they are learning from Japan's experience with an asset-inflated bubble in the late 1980s and the burst of it, he added.