Amid the Chinese economy's efforts to curb inflation acceleration, after the consumer prices index exceeded the Bank's target 4.00%, where Chinese consumer confidence index dropped during the fourth quarter of 2010 to the lowest level since 2009, indicating that the economy is working to curb spending in the nation, on concern about inflation to increase more than 6.00%.

On the other hand, high housing prices and rising interest rates also curbed private consumption.

Furthermore, inflation rates in China has accelerated to the fastest pace in more than two years as consumer price surges, so China's central bank decided to increase overnight cash target for a third time since mid-October 2010 in an effort to curb rising inflation risk during this year.

The People Bank of China increased interest rates by 25 basis points to 6.06% during the month, from 5.81% in December, while the one-year deposit rate will rise to 3 percent from 2.75 percent.