China cuts interest rates as economic growth slows

The image is from the same source.

China cut a key interest rate for the first time in almost two years as official figures showed its economic growth had slowed.

The National Bureau of Statistics said that the GDP grew 4% for the last three months of the year.

That was better than most people thought, but it was a lot slower than the previous quarter.

Retail sales growth for December fell to 1.7%, a sign of weakness.

China's economy grew by 8.1% in the year as a whole, which was above Beijing's annual target of over 6 percent.

The growth data has yet to take into account the effect of the latest coronaviruses outbreak, which was the slowest in a year and a half.

The GDP figure didn't reflect the impact of domestic spread of the omicron variant since late December, which will hit the service industry significantly, especially offline consumption and transportation, according to the Economist Intelligence Unit.

The PBOC lowered the interest rate on loans to 2.85% to help boost the economy. It was the first cut since April 2020.

The seven-day reverse repo rate was cut by the PBOC, as well as another 200 billion of medium-term cash into the financial system.

The moves put China in a different league than other major central banks around the world.

The Bank of England in the UK raised its interest rate for the first time in three years in response to calls to tackle rising prices.

Concerns about the financial health of some of the country's biggest property firms and the spread of the Omicron variant of Covid-19 have clouded China's economic outlook.

China's economy grew by 8.1% last year, but it was in the middle of a Pandemic in 2020 so that is coming off a low base.

There are two worrying signs when you look at the latest data.

Some of the country's biggest developers are facing a debt crisis as the country's property sector is attracting less investment.

Beijing's measures to limit the amount of money some real estate firms could borrow caused the industry's slowdown. The sector accounts for 25% of the country's GDP and a sharp contraction could affect the growth of the economy.

Retail sales came in much weaker than expected and consumers seem to be less optimistic. China's zero Covid policy meant that some major cities went back into lock down from last month. The full impact of that has yet to be seen.

The country's central bank took the unexpected step of making some key loans for businesses cheaper to help cushion the slowdown.

It seems unlikely that Beijing will go much further to support big businesses and their billionaire owners than it already is.

The zero Covid policy is likely to be retained by the government ahead of the Winter Olympics and a Communist party meeting later this year, where President Xi is expected to tighten his grip on the world's second largest economy with a third term in power.

The caption is media.

Why does China's economy matter to you?

China.
GDP is the sum of all the things.
The economy of Asia.
A coronaviruses epidemic.