China cuts interest rate to shore up sagging economy
Newslooks- BEIJING (AP)
China’s central bank trimmed a key interest rate Monday to shore up sagging economic growth at a politically sensitive time when President Xi Jinping is trying to extend his hold on power.
The decision suggested Beijing is temporarily setting aside worries over high debt to act to head off a slump before Xi is expected to try to award himself a third five-year term as Communist Party leader at a meeting this fall.
Residents walk near a bazaar closed due to the rain in Beijing, Sunday, Aug. 14, 2022. China’s central bank trimmed a key interest rate Monday to shore up sagging economic growth at a politically sensitive time when President Xi Jinping is believed to be trying to extend his hold on power. (AP Photo/Ng Han Guan)
The ruling party has effectively acknowledged it cannot hit this year’s official 5.5% growth target after anti-virus curbs disrupted trade, manufacturing and consumer spending. A crackdown on excessive borrowing in China’s vast real estate industry triggered a plunge in home sales and construction.
Delivery men sort out their deliveries on the street in Beijing, Monday, Aug. 15, 2022. China’s central bank trimmed a key interest rate Monday to shore up sagging economic growth at a politically sensitive time when President Xi Jinping is believed to be trying to extend his hold on power. (AP Photo/Ng Han Guan)
“The momentum of economic recovery has slowed,” a government spokesman, Fu Linghui, said at a news conference. “More efforts are needed to consolidate the foundation of economic recovery.”
A man and a child wearing masks sit in an electric tricycle with a Chinese national flag in Beijing, Monday, Aug. 15, 2022. China’s central bank trimmed a key interest rate Monday to shore up sagging economic growth at a politically sensitive time when President Xi Jinping is believed to be trying to extend his hold on power. (AP Photo/Ng Han Guan)
Residents pass by towels hung up to dry on a scooter and a drying rack outside a barber shop in Beijing, Monday, Aug. 15, 2022. China’s central bank trimmed a key interest rate Monday to shore up sagging economic growth at a politically sensitive time when President Xi Jinping is believed to be trying to extend his hold on power. (AP Photo/Ng Han Guan)
The central bank “seems to have decided it now has a more pressing problem,” Julian Evans-Pritchard of Capital Economics said in a report.
A resident waits at a bus-stop near an ad depicting shoppers in Beijing, Saturday, Aug. 13, 2022. China’s central bank trimmed a key interest rate Monday to shore up sagging economic growth at a politically sensitive time when President Xi Jinping is believed to be trying to extend his hold on power. (AP Photo/Ng Han Guan)
The slowdown adds to political headwinds for Xi, China’s most powerful leader since at least the 1980s. He still is widely expected to succeed, but some analysts say he might be forced to compromise by sharing more of his sweeping powers with other party leaders.
A delivery man walks near a Chinese flag after picking up an order at a mall in Beijing, Monday, Aug. 15, 2022. China’s central bank trimmed a key interest rate Monday to shore up sagging economic growth at a politically sensitive time when President Xi Jinping is believed to be trying to extend his hold on power. (AP Photo/Ng Han Guan)
Despite downward pressure on growth, party leaders affirmed their commitment to the severe “zero-COVID” strategy in a July 29 statement. It dropped previous references to growth targets after the economy grew by just 2.5% over a year earlier in the first half of 2022.
A resident walks by towels hung up to dry on a scooter and a drying rack outside a barber shop in Beijing, Monday, Aug. 15, 2022. China’s central bank trimmed a key interest rate Monday to shore up sagging economic growth at a politically sensitive time when President Xi Jinping is believed to be trying to extend his hold on power. (AP Photo/Ng Han Guan)
Growth in factory output in July slowed to 3.8% over a year ago, down 0.1 percentage point from the previous month, according to the National Bureau of Statistics. Growth in consumer spending fell to 2.7%, down 0.4 percentage points from June.
A delivery man waits for orders near a street sign in Beijing, Sunday, Aug. 14, 2022. China’s central bank trimmed a key interest rate Monday to shore up sagging economic growth at a politically sensitive time when President Xi Jinping is believed to be trying to extend his hold on power. (AP Photo/Ng Han Guan)
Sales of housing and other commercial real estate fell 28.8% from a year earlier.
Workers clear construction rubbish from near a restaurant in Beijing, Monday, Aug. 15, 2022. China’s central bank trimmed a key interest rate Monday to shore up sagging economic growth at a politically sensitive time when President Xi Jinping is believed to be trying to extend his hold on power. (AP Photo/Ng Han Guan)
Beijing is forcing developers to reduce debt levels, which caused economic growth to plunge in mid-2021, disrupting a recovery from the coronavirus pandemic. The crackdown has bankrupted smaller developers and fueled fears of a default by the biggest, Evergrande Group, which owes $310 billion to banks and bondholders.
Residents carry their fresh produces after shopping in Beijing, Monday, Aug. 15, 2022. China’s central bank trimmed a key interest rate Monday to shore up sagging economic growth at a politically sensitive time when President Xi Jinping is believed to be trying to extend his hold on power. (AP Photo/Ng Han Guan)
The “downward trend” in real estate has a “great impact on economic growth,” said Fu, the government spokesman.
The rate cut and extra money for lending are small compared with China’s $17 trillion-a-year economy, the world’s second-largest. Instead, such changes are widely seen as a signal to the state-owned banking industry to lend more and cut charges for commercial borrowers.
Construction workers wearing masks walk to their work site in Beijing, Monday, Aug. 15, 2022. China’s central bank trimmed a key interest rate Monday to shore up sagging economic growth at a politically sensitive time when President Xi Jinping is believed to be trying to extend his hold on power. (AP Photo/Ng Han Guan)
The ruling party is struggling to revive activity after Shanghai, the country’s business capital, and other industrial centers were shut for weeks starting in late March to fight virus outbreaks.
Managers of the Shanghai port, the world’s busiest, say shipping is back to normal, but economists say it might be months before the flow of smartphones, home appliances, consumer electronics and other goods through complex supply lines fully recovers.
Residents carry their fresh produces after shopping in Beijing, Monday, Aug. 15, 2022. China’s central bank trimmed a key interest rate Monday to shore up sagging economic growth at a politically sensitive time when President Xi Jinping is believed to be trying to extend his hold on power. (AP Photo/Ng Han Guan)
A survey of manufacturers released earlier showed activity in July contracted. Indicators of new orders, exports and employment declined.
Retails sales were off 0.7% from a year earlier in the first half after plunging 11% in April following the temporary shutdown of Shanghai and other cities.
Elderly residents wear their masks to leave after chatting on the street in Beijing, Monday, Aug. 15, 2022. China’s central bank trimmed a key interest rate Monday to shore up sagging economic growth at a politically sensitive time when President Xi Jinping is believed to be trying to extend his hold on power. (AP Photo/Ng Han Guan)
