Potential growth of China's economy will be gradually adjusted downwards to 7%-9% during "12th Five-year Plan" from the optimal 8%-10%,and it will continue to drop further during "13th Five-year Plan". With the deceleration of the China's economy in this year,the producer price index generates continuous negative growth,and the manufacturing sector gets into a "deflation" status. The analysis based on the real economy,the monetary and credit,the capital markets and the balance sheet shows that the real economy has been plunged into deflation process .To response to the deceleration of potential economic growth and the risk of deflation,this paper recommend that,in short time,the government should actively launch the "Chinese version" asset purchase,and adopt monetary policy tools to reduce the actual cost of capital; in long time,the government need to promote structural reform of market-oriented. <<