Reuters, Beijing/Shanghai :
China’s central bank cut key lending rates in a surprise move on Monday to revive demand as data showed the economy unexpectedly slowing in July, with the factory and retail activity squeezed by Beijing’s zero-COVID policy and a property crisis.
The grim set of figures indicates the world’s second-largest economy is struggling to shake off the June quarter’s hit to growth from strict COVID restrictions, prompting some economists to downgrade their projections.
Industrial output grew 3.8 per cent in July from a year earlier, according to the National Bureau of Statistics (NBS), below the 3.9 per cent expansion in June and a 4.6 per cent increase expected by analysts in a Reuters poll.
Retail sales, which only just returned to growth in June, rose 2.7 per cent from a year ago, missing forecasts for 5.0 per cent growth and the 3.1 per cent growth seen in June.
“The July data suggest that the post-lockdown recovery lost steam as the one-off boost from reopening fizzled out and mortgage boycotts triggered a renewed deterioration in the property sector,” said Julian Evans-Pritchard, senior China economist at Capital Economics.
“The People’s Bank of China is already responding to these headwinds by stepping up support…But with credit growth proving less responsive to policy loosening than in the past, this probably won’t be sufficient to prevent further economic weakness.”
Local shares gave up earlier gains after the data while the yuan weakened to a one-week low against the dollar and the Australian and New Zealand currencies pulled back from their recent two-month highs.
China’s economy narrowly escaped a contraction in the June quarter, hobbled by the lockdown of the commercial hub of Shanghai, a deepening downturn in the property market and persistently soft consumer spending.
Risks still abound as many Chinese cities, including manufacturing hubs and popular tourist spots, imposed lockdown measures in July after fresh outbreaks of the more transmissible Omicron variant of the coronavirus were found.
