BEIJING/SHANGHAI (Reuters) - Surveys of China's factory and services sectors showed stubborn weakness in the world's second-biggest economy in March, adding to bets that Beijing will have to roll out more policy support to avert a sharper slowdown. Three separate surveys showed Chinese companies shed jobs last month as they struggled with soft demand and deflationary pressures, suggesting that economic growth may have slipped below 7 percent in the first quarter of 2015, which would be the weakest in six years. "We expect first-quarter growth to drop to 6.8 percent and the government might start easing policies significantly in the second quarter," said Zhang Zhiwei, an economist at Deutsche Bank in Hong Kong, adding that the central bank may relax banks' reserve requirement ratio (RRR) as early as this week or next. "Growth faces headwinds from the property slowdown and a fiscal slide," said Zhang, referring to a fall-off in government revenues that many worry could further dampen economic growth by crimping investment.
Asian stocks were mostly lower on Wednesday, taking their lead from weaker U.S. shares, while the dollar slid against the yen as Tokyo's Nikkei recoiled in volatile trade. Crude oil prices continued to decline as negotiations between Iran and world powers over nuclear technology extended beyond a deadline. MSCI's broadest index of Asia-Pacific shares outside Japan stood little changed, meandering in and out of the red. Bucking the trend were Chinese equities, one of Asia's best performers last quarter thanks to hopes for more official monetary easing measures.
China welcomes Taiwan's decision to apply to join the Beijing-led Asian Infrastructure Investment Bank (AIIB) as long as the self-ruled island uses an appropriate name, state news agency Xinhua reported on Wednesday. China's Taiwan Affairs Office has received Taiwan's letter of intent to join and has passed it to the AIIB's interim secretariat, Xinhua cited Taiwan Affairs Office spokesman Ma Xiaoguang as saying.
Companies struggled in China and much of the rest of Asia in March amid persistently weak domestic and global demand, suggesting that policymakers may have to resort to more stimulus to spur growth. Three separate surveys of China's factory and services sectors released on Wednesday showed stubborn weakness in the world's second-biggest economy, putting the government's newly minted growth target of around 7 percent for the year at risk. The official Purchasing Managers' Index ticked up to 50.1 in March from 49.9 in February, but a separate private survey from HSBC which focuses on small and mid-sized firms showed factory activity contracted after two months of recovery. With their indexes hovering around the 50 level that separates a contraction in activity from an expansion, both reports indicate economic conditions remain sluggish, which may well be reflected in China's first-quarter growth figures on April 15.