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"It's just that with these global headwinds, this is a difficult time for China to be going through this transition," he said. Last year's drop in demand for China's exports due to U.S. and European economic woes prompted Beijing to reverse course, easing controls on bank lending to help struggling manufacturers. Most analysts expect the central bank to cut bank reserve ratios again soon, freeing up more money for lending. "We are still optimistic that China will pick up later in the year, especially since low inflation gives policymakers room to loosen policy further," said Daniel Martin, an economist with Capital Economics in Singapore. "This should support global demand, even as the eurozone remains mired in recession," he said. The stimulus versus inflation dilemma is more acute for India, where the central bank faces enormous political pressure to stoke growth, despite persistent inflation and soaring deficits. "It is very disappointing," Chakravarthy Rangarajan, chairman of the Prime Minister's Economic Advisory Council, said of Friday's data. "One had not expected such a sharp decline." Concerns about governance and policy uncertainty are weighing on investment, while India's twin current account and fiscal deficits have alarmed economists and punished the rupee. Hong Kong, meanwhile, reported Friday that its first-quarter economic growth stalled, expanding only 0.4 percent, as exports shrank. The government of the southern Chinese financial center warned Friday of further risks from the European debt crisis. The news from Asia is not entirely bad, though. Indonesia, Southeast Asia's biggest economy, is still growing at a 6 percent pace. Across the region, authorities have eased monetary policies to counter feeble European demand and spur growth. Japan, Asia's second biggest economy, saw its industrial output rise 1 percent in March, helped by a recovery in household spending. Rebuilding in areas devastated by the March 11, 2011 tsunami also could help support industrial production despite weak global demand.
[Associated
Press;
Business writers Erika Kinetz in Mumbai and Kelvin Chan in Hong Kong contributed to this report.
Follow Elaine Kurtenbach on Twitter: http://twitter.com/ekurtenbachsh.
Copyright 2012 The Associated
Press. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
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