New Delhi, March 10 -- China is just managing to keep retail deflation at bay. Official data for February released on Monday showed that its consumer price index rose 1.3% from a year earlier. In January, it had recorded a rise of just 0.2%. The February reading marked a near three-year high.

For this, it has an extended Lunar New Year break to thank, as this is a season that tends to see better spending.

Of course, this also raises the question of whether deflationary pressures will rise again once that effect wears off. Note that China's producer price index has been negative for a prolonged period. Last month, it posted a 0.9% year-on-year drop.

All this indicates that domestic demand remains painfully weak, even as Beijing struggle...