China’s central bank took action on Tuesday in response to the country’s weakening consumer spending and factory output, as the effects of the Covid-19 pandemic and ongoing lockdowns continue to hinder economic growth. However, concerns are growing as the National Bureau of Statistics decides to stop reporting youth unemployment figures that have consistently risen above 20% this year. Additionally, the release of a consumer confidence report earlier this year was also halted.
In addition to the prolonged lockdowns, China is also grappling with a deflating property bubble. The suspension of bond payments by real estate developer Country Garden Holdings further exacerbates the situation, and policymakers remain hesitant to implement substantial stimulus measures out of fear of reigniting speculative activity.
To counter these challenges, China’s central bank reduced key interest rates for one-year loans and one-week borrowing. The decision comes in response to July’s negative inflation rate and disappointing data indicating lower-than-expected growth in retail sales and industrial production.
These latest measures may not be the final ones, as the government faces high stakes in attempting to achieve its already modest 5% economic growth target for the year. The road to recovery remains uncertain.