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China growth slows across all fronts in July, prompting unexpected rate cut
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China's economy stumbled in July as a two-month boost from easing lockdowns faded, prompting the country's central bank to unexpectedly cut two key interest rates in an effort to shore up faltering growth.
A raft of data released Monday showed economic activity slowed across the board in July, including factory output, investment, consumer spending, youth hiring and real estate, highlighting the breadth of the economic challenge facing policy makers in a politically sensitive year for leader Xi Jinping, who is expected to break with recent precedent and seek a third term in power this fall.
The fresh evidence of China's slowdown adds to the headwinds facing the global economy this year, which is already reeling from the fallout from Russia's invasion of Ukraine and efforts by central banks in the U.S., Europe and beyond to tame rocketing inflation by jacking up borrowing costs.
The world's second-largest economy is straining under the effects of Beijing's zero-tolerance approach to Covid-19 and a deflating property bubble, which have triggered protests and mortgage-payment strikes in several provinces and cities. Consumers are reluctant to spend and businesses are wary of investing, a consequence of the "humongous uncertainty about the future," said Alicia García-Herrero, Asia-Pacific chief economist at investment bank Natixis in Hong Kong.
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One stark sign of China's economic malaise: One in five Chinese youth, or 19.9%, was unemployed in July, Monday's figures showed, the highest level since China started publishing such data in 2018.
On Monday, the People's Bank of China cut by 0.1 percentage point two key interest rates and pumped the equivalent of $59.3 billion into the financial system to rev up lending and wider economic growth. The unexpected move marked a small step toward more support for China's economy, and may foreshadow further cuts to borrowing costs in the months ahead, some economists said.