China surprised markets by cutting interest rates as new data shows the country’s economic
growth is slowing.
China’s National Bureau of Statistics reported that the country’s retail sales grew 2.7% in July
from a year earlier. That was well below the 5% growth forecast by economists who were polled
by the Reuters News Agency, and down from growth of 3.1% in June of this year.
At the same time, industrial production in China during July grew by 3.8%, also missing
economist expectations for 4.6% growth and a drop from the previous month’s 3.9% increase.
The slowdown is being blamed on China’s ongoing COVID-19 restrictions, which are proving to
be a drag on consumer spending and industrial output.
In response to the disappointing economic data, the People’s Bank of China unexpectedly
lowered two of its key interest rates, both for the first time since January, in an effort to stimulate
consumer spending and economic activity.
Investments in China’s real estate market fell in July from June, and investments in
manufacturing slowed during the month as well.
While the overall unemployment rate in Chinese cities fell to 5.4% in July, employment among
youth aged 16 to 25 remains at a record high of 20%.
