http://online.wsj.com/article/SB10001424052702304058404577496443063859250.html China and India are both dealing with economic slowdowns but are on completely different footings to tackle the challenge. Beijing has a range of fiscal and monetary options to revive growth, while New Delhi must make tough political decisions to stem its decline. Growth in both countries is essential if the global economy is to expand, given the recession in Europe and the sluggish recovery in the U.S. and Japan. But India and China are grappling with different issues. China doesn't want to repeat the mistakesâ€”such as triggering a property bubbleâ€”that it made in its all-out response to the global financial crisis of 2009. India, meanwhile, is struggling to carry out structural economic reforms it failed to enact during its recent boom years. Related China's Consumer Inflation Eases Sharply China's gross domestic product has grown at an average annualized rate of 10% since 2000, but government officials know they can't sustain that torrid pace. Growth fell to 8.1% year-over-year in the first quarter, the slowest pace since 2009, and is widely expected to fall to about 7.5% in the second quarter. If the euro-zone crisis persistsâ€”or China's stimulus is poorly carried outâ€”China's growth may weaken further. But China is better positioned to handle a shock than it was in 2008. It relies less on trade for growth: In 2008, China's net exports amounted to 7.7% of GDP; in 2011 the share had dropped to 2.6%.(and pundits claim that chinese GDP growth are export driven) Beijing reported on Monday that inflation declined to 2.2% in June, compared with a year ago. With government debt at an estimated 22% of GDP, China has plenty of levers to pull to stimulate its economy in the face of declining demand. China and India are both dealing with economic slowdowns but have completely different ways of tackling the challenge. The WSJ's Jake Lee speaks with Hong Kong Bureau Chief Ken Brown. China's economy faces "huge downward pressure," Premier Wen Jiabao said over the weekend, and repeated that China was committed to boosting growth. "China is in a very comfortable position compared to the rest of the world," said Luis Kuijs, project director at the Fung Global Institute, a Hong Kong think tank. "It's more a matter of choice of what policy measures it will take to stimulate the economy, rather than whether it will be able to." A large portion of China's economy is in the hands of its state-owned companies. That means the government can more easily get its economic decisions carried outâ€”though it does present long-term problems for China as it tries to shift to an economy based on more innovation, competition and private enterprise. The five largest Chinese banks, all state-owned, account for about 44% of the nation's financial assets and listen closely to the central government's "window guidance"â€”ignore-at-your-peril advice about lending doled out by bank regulators and the central bank. State-owned firms dominate infrastructure sectors including transportation, energy, electricity, construction and steel. The Chinese government recently has stepped in with stimulus measures. To boost demand for commodities and construction among other industries, the government approved two steel plants and several energy projects. On the monetary front, the central bank has cut interest rates twice in the past few weeksâ€”the first such moves since December 2008â€”and in May reduced the level of reserves banks are required to hold. China has plenty of room for additional monetary moves. Indeed, one challenge for China is to make sure it doesn't overdo it. During the financial crisis, the government ordered state-owned enterprises to step up lending considerably. The result was a flood of money into infrastructure and real-estate projects that spurred growth, but produced a spate of bad loans and a property bubbleâ€”which the government has spent two years trying to deflate. India faces an economic challenge similar to China's, but has fewer potential solutions. New Delhi is trying to rebound from 5.3% economic growth in the March 31 quarter, the slowest pace in nine years. Its budget deficit of 5.8% of GDP in the recent fiscal year, which overshot a target of 4.6%, leaves little room for fiscal stimulus. Government debt is estimated at 67.6% of GDP. Enlarge Image Bloomberg News (India), Reuters "India's hands are tied, and because of that it's much more exposed to the global slowdown," said Frederic Neumann, co-head of Asian economic research for HSBC. "It has no fiscal ammo left to pump-prime the economy, so it has to endure a slowdown and take it on the chin." India's main challenge is to stimulate business investment, which is drying up amid wariness among both domestic and foreign companies about shifting tax policies and regulations. The country's currency, the rupee, has tumbled against the dollar in the past year, partly due to growing investor concerns about India's high current-account deficit, which is roughly 4% of GDP. The rupee's fall has driven up real import costs for Indian companies and made foreign-currency loans more expensive to service. The Reserve Bank of India in April cut interest rates for the first time in three years to fuel business lending. But when industry was looking for more last month, the central bank said it couldn't cut rates further with inflation uncomfortably high at 7.6%. "The sad thing is that it makes sense in China for it to be slowing down, because it's maturing from a low-income to a middle-income economy," said Rob Subbaraman, Asia economist at Nomura Securities. "In India, growth should be picking up and not slowing down." Last month, China and India made sizable funding commitments to the International Monetary Fund to help counter the euro-zone debt crisis. China pledged $43 billion while India said it would provide about $10 billion. But the Asian giants could provide a much bigger lift to the global economy by getting their own houses in order.