The HSBC purchasing managers’ index was 49.6 in March, down from 50.7 in February, marking a transition from commercial activity to contraction in China. Compared to the country’s official figures from the National Bureau of Statistics, the slide between February and March was only from 50.1 to 49.9, but still places the world’s second largest economy in contraction due to a weak property market weighing on domestic demand. Consequently, Beijing will likely have to ease policies in order to avoid a sharper slowdown. Despite two interest rate cuts since November, a reduction in banks’ reserve requirements, and repeated attempts by the central bank to reduce financing costs, the economy has lost momentum. Wary of Japan’s current stifled economic growth due to two decades of falling prices, Central Bank Governor Zhou Xiaochuan warned that the country must be more vigilant about the impact of falling prices. China’s economic growth is expected to slow even more in the next few months amid deflationary pressures and soft demand, the government is expected to start easing policies significantly in the second quarter.