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China’s stocks (IFB1) fell on the first trading day of 2012 after Premier Wen Jiabao said business conditions may be “relatively difficult” this quarter as inflation stays “elevated” and overseas demand weakens.

China Cosco Holdings Co., Asia’s largest shipping line, slid 2.6 percent after an index of export orders indicated a third month of contraction. Shenzhen Development Bank Co. and China Citic Bank Corp. paced a drop for lenders on speculation a recent cash crunch will worsen before the Chinese new year holidays later this month. Gree Electric Appliances Inc. (000651) led gains (SHSZ300) for consumer goods makers after the China Daily reported the government may provide subsidies for household appliances.

“Investors are concerned about liquidity in the market and this adds to worries about the economic slowdown after Wen’s comments,” said Chen Liqiu, a strategist at Jianghai Securities Co. in Shanghai. “We need reserve-ratio cuts for the liquidity issue to be eased.”

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, slipped 4.7 points, or 0.2 percent, to 2,194.67 at the 11:30 a.m. break, erasing a gain of as much as 0.8 percent. The CSI 300 Index slid 0.6 percent to 2,332,53. China’s markets were shut yesterday and Jan. 2 for the holidays, while the MSCI Asia Pacific ex-Japan index gained 2 percent during that time. The Standard & Poor’s 500 Index climbed 1.6 percent yesterday.

The Shanghai Composite tumbled 22 percent last year, the most since 2008 and extending 2010’s 14 percent plunge, on concern increases in borrowing costs and Europe’s debt crisis will derail economic growth. The index’s 33 percent drop since 2009 makes it the worst performer among the world’s 15 biggest markets. The CSI 300 Index (SHSZ300) slid 25 percent in 2011.