China's PBOC cuts interest rates as lockdowns and real estate crisis slow economy & More Latest News Here – Up Jobs

Economic data published Monday for July was much worse than expected.

Retail sales grew 2.7% in July from a year ago, slowing from June’s 3.1% growth, the National Bureau of Statistics reported. That number widely missed the 5% increase forecast by economists in a Reuters poll. Industrial production was up 3.8% in July from a year earlier, down from the 3.9% growth in June. It also missed the market expectation of a 4.6% rise.

In addition, the real estate slump has intensified further. Property investment by developers contracted 6.4% in the first seven months of this year, accelerating from the 5.4% decline in the first half, data from the NBS showed. Meanwhile, new home prices in 70 major cities dropped for an 11th consecutive month in July.

“The July data suggest that the post-lockdown recovery lost steam as the one-off boost from reopening fizzled out and mortgage boycotts triggered a renewed deterioration in the property sector,” said Evans-Pritchard from Capital Economics.

Angry homebuyers across the country have threatened to stop paying their mortgages on unfinished homes, jolting markets and prompting developers and authorities to take action to defuse the crisis.

The real estate market was already suffering from a prolonged price downturn and a liquidity crisis that has engulfed some of the nation’s largest developers.

Evans-Pritchard said it was unclear whether Monday’s rate cuts will be enough to revive the rebound in credit growth.

“The current weakness in loan demand is partly structural, reflecting a loss of confidence in the housing market and the uncertainty caused by recurrent disruptions from China’s zero Covid strategy,” he said.

“These are drags that can’t be easily solved by monetary policy,” he added.

Fu Linghui, a spokesperson for the NBS, also expressed concerns on Monday about extreme heat and rainfalls that are hitting food production and causing inflation in the country.

“Affected by the continuous high temperature in many places, the price of fresh vegetables rose by 12.9% year-on-year, which was significantly higher than the same period in previous years,” Fu said at a Monday press conference in Beijing.

He pointed out that the extreme heat has caused droughts in some agricultural areas in the south. In the north, rainfall and flooding also resulted in some crop failures.

“August and September are the key periods for the formation of autumn grain production. [We must] pay close attention to the impact of natural disaster, insects and disease on our country’s food production,” he added.