Apr 1, 9:42 AM EDT

Gloomy data out of China, Japan add to pressure to stimulate Asia's 2 biggest economies

AP Photo
AP Photo/Shizuo Kambayashi

Buy AP Photo Reprints
A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
US manufacturing grew in March at slower pace; factories report drag from falling oil prices

Gloomy data out of China, Japan add to pressure to stimulate Asia's 2 biggest economies

Japan central bank survey finds corporate outlook cautious, capital spending to fall

Puerto Rico power company wins extension with creditors amid financial woes

Following signs that oil price falls have bottomed out, eurozone consumer price falls moderate

UK economy grew by 2.8 percent last year _ more strongly than previously thought

Business economists boost 2015-2016 outlook for US economy, cite job growth, consumer spending

Brazil's economy barely avoided recession last year, rising 0.1 percent

US economy lost pace in fourth quarter but approaching almost 6 years of steady expansion

Duration of US economic recoveries since World War II, at a glance

Greece's Debt Threatens to Spread
State budget
gaps map
Auto industry problems trickle down, punish Tennessee county
Women give old Derby hats a makeover in tough economy
S.C. town deals with highest unemployment in South
How mortgages were bundled and sold as securities
Tracking the $700 billion financial bailout
Tracking the year's job losses
State-by-state foreclosures since 2007
Credit crisis explained
Presidents and their economic legacies
Lexicon of the financial crisis
Americans' addiction to debt

BEIJING (AP) -- China and Japan reported gloomy industrial data Wednesday, adding to pressure on leaders of the world's second- and third-largest economies to launch new stimulus.

Two surveys showed Chinese manufacturing was weak in March and employers cut more jobs. In Japan, a central bank survey found companies expect conditions to deteriorate and plan to cut investment.

The latest data muddy the global outlook at a time when the U.S. is the only major economy to show signs of healthy momentum. Both China and Japan are relying on U.S. demand and a strong dollar to offset internal problems. Either could send shockwaves through the global economy if efforts to overhaul their economic models fail.

The loss of manufacturing jobs is a setback for Chinese leaders who are trying to steer their economy to more sustainable growth based on domestic consumption while avoiding a politically dangerous spike in unemployment. They have cut interest rates twice since November but want to avoid a large-scale stimulus that would set back efforts to reduce reliance on investment.

The surveys by HSBC Corp. and an industry group, the China Federation of Logistics and Purchasing, found manufacturing was weak in March. HSBC said companies shed jobs at their fastest rate in seven months. That came after China's central bank governor, Zhou Xiaochuan, warned Sunday that economic growth had fallen "too sharply."

Despite improvement in the federation's index, "growth is still likely to have slowed sharply last quarter," said Julian Evans-Pritchard of Capital Economics in a report. "We expect more policy support measures, including further rate cuts and required reserve ratio reductions, as the government moves to avoid missing its annual growth target."

The Bank of Japan's quarterly "tankan" survey, the country's leading measure of corporate sentiment, highlights a dilemma for leaders who are trying to break out of two decades of stagnation.

Japanese media assert there is growing friction between the central bank and Prime Minister Shinzo Abe's administration over expanding stimulus further. The central bank governor, Haruhiko Kuroda, says the economy is on course for a moderate recovery and inflation will pick up again after it cools due to lower oil prices.

The central bank has been pumping trillions of yen (tens of billions of dollars) into the economy through asset purchases aimed at keeping interest rates low and stimulating inflation. But Kuroda and other economists say government action alone cannot fix Japan's problem with weakening demand.

Two-thirds of the 11,126 companies surveyed anticipate a further deterioration in conditions. Some 83 percent of large manufacturers found conditions "not so favorable" or unfavorable.

The survey found companies plan to reduce capital spending by nearly 5 percent in this fiscal year, which ends March 31, 2016. The companies expect to cut spending on land purchases by nearly 37 percent.

Japan emerged from recession last year following a sales tax hike that dented consumer and corporate demand. But growth still is weak.

In China, economic growth slowed to 7.3 percent in the latest quarter. That prompted concern the decline brought on by Beijing's efforts to shift the economy to self-sustaining growth based on domestic consumption might be deepening too sharply.

The top Chinese economic official, Premier Li Keqiang, said in March that Beijing might intervene to stimulate growth if employment weakens too much.

Manufacturing "continues to struggle to gain growth traction," said economist Annabel Fiddes of Markit Economics, which conducted the HSBC survey.

"Company downsizing policies contributed to a further decline in manufacturing employment," Fiddes said in a statement. "Any savings were generally passed on to clients as part of attempts to attract new business, suggesting a further squeeze on profit margins."

Instead of the uptick usually seen as Chinese factories resume work following the Lunar New Year holiday, HSBC said its survey showed new orders declined for the first time in three months. New export work also fell for a second straight month.

On Sunday, the Chinese central bank governor, Zhou Xiaochuan, said growth had fallen "too sharply." He said inflation has fallen so low the country should be alert to the possibility of deflation, or a damaging overall decline in prices.



HSBC Corp.: http://www.hsbc.com

China Federation of Logistics and Purchasing: http://www.chinawuliu.com.cn

© 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.