Behind the difficulties of the Chinese economy are the continuous corona lockdowns and the heat waves in the southern part of the country.
China’s central bank surprised the financial market on Monday morning with an interest rate cut. In this way, the central bank aims to revive consumer demand.
The key one-year financing rate fell from 2.85 percent to 2.75 percent. At the same time, the central bank pumped 400 billion yuan, or about 57.7 billion euros, of additional liquidity into the market.
The world’s second largest economy has been in trouble, and the country is not meeting economic growth forecasts.
Industrial production grew by 3.8 percent in July, while the growth in June was 3.9%.
In June, retail trade just barely turned positive. In July, growth was only 2.7%, while the forecast was up to 5%.
China’s economy has been disciplined by continuous, severe corona lockdowns in numerous cities and especially in the large growth center Shanghai. In addition, the real estate market is sluggish and consumer demand is low. The international economy is hindered by the war in Ukraine and inflation, which also affects China.
The southern part of China has had its share of intense heat.
In China, unemployment eased slightly in July and is now 5.4 percent. Youth unemployment, on the other hand, is very worrying. Every fifth Chinese youth is unemployed.
At least the interest rate cut didn’t have a big impact on the market right away. Tokyo’s Nikkei index rose by one percent and Sydney’s S&P/ASx 200 index rose by 0.4 percent. The Shanghai and Hong Kong stock markets fell slightly.