The fallout from nearly two years of Europe's debt crisis has reached China's shores. Commerce Minister Chen Deming warned today of further economic slowdown in 2012, due to declining demand abroad and a tougher financing environment. He said China's annual inflation this year is likely to exceed 5.5 percent and economic growth will be 9 percent or slightly higher.

Increasing risks.

Chinese Commerce Minister Chen Deming says the global economy faces a grim outlook as the European debt crisis deteriorates and the global recovery becomes increasingly uncertain.

For China, he predicts GDP will grow around 9% this year, with consumer inflation rising about 5.5%, higher than the government's target of 4 percent. He adds that the inflationary pressures are likely to persist next year due to rising labor and raw materials costs.

Chen says that will complicate the nation's exports. He says China's trade surplus is likely to continue to narrow this year and next due to shrinking external demand, as well as domestic problems such as inflation and financing difficulties for small firms. However, the minister says the country's economic fundamentals are still sound despite the many internal and external difficulties.

Ten years after joining the World Trade Organization, China has opened its markets and become the world's second largest economy. Chen Deming called on trade partners to open their markets further to China. He said China hopes the U.S. would increase high tech exports to China and let more Chinese companies invest in the U.S. He also noted that China is looking to boost imports and encourage outbound investment.