The People’s Bank of China (PBOC) on Tuesday surprisingly cut the interest rate on its one-year bank loans by 15 basis points to 2.5%, the lowest since 2020, with the aim of strengthening the national economy. Affected by the real estate crisis and the fall in consumption.
It was the second cut by the company since June and the first under the mandate of new governor Ban Gongsheng, who took over from Yi Gang after his retirement. The central bank also cut short-term interest rates by ten basis points.
The unexpected result comes on the same day the Asian country’s National Statistics Office (ONE) released several macroeconomic data points to a slowdown in the national economy.
Thus, Chinese industrial production rose 3.7% year-on-year in July, lower than analysts had forecast, compared with the 4.4% growth seen in the previous month. At the same time, retail sales rose 2.5% in the seventh month of the year, six-tenths less than in June and its slowest rise since the end of 2022.
Although the Chinese economy continues to recover, “the international political and economic situation remains complex and domestic demand remains insufficient,” ONE stressed in a statement.
“It is necessary to continue to consolidate the foundations of economic recovery (…) We must intensify the role of macro policies in regulating the economy and make solid efforts to expand domestic demand, boost confidence and prevent risks,” the Chinese office said. Statistics.
One of the main risks to the Chinese economy is its real estate sector, as evidenced by the problems faced by developer Country Garden, which has been in the news these days due to a sharp correction in its actions.
The company has since 2021 “entered into unprecedented difficulties with several unfavorable factors, resulting in serious difficulties in sales and financing in the market.”
In this way, two years after another colossus such as Evergrande’s woes began, Country Garden’s problems are once again troubling the Chinese real estate industry.
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