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In a sign of increasing pressure on policy makers as new data point to a weak recovery in the world’s second-largest economy, China said weeks after the indicator reached record levels, the announced that it would stop publishing data on the unemployment rate.
The People’s Bank of China also unexpectedly cut its benchmark interest rate on Tuesday by the largest amount since the start of the coronavirus pandemic, further bolstering officials’ concerns about a loss of momentum months after COVID-19 restrictions were lifted. Indicated.
The Chinese government is grappling with a number of economic challenges, including a liquidity crisis in the real estate sector, plummeting exports, sluggish foreign investment and persistently low consumption.
The youth unemployment rate, which China began reporting in 2018, reached 21.3% in June, but the figure was not included in broader data for July released on Tuesday. The report was much weaker than expected, showing slower growth in retail sales and industrial production, two drivers of the country’s economic recovery.
In July, retail sales rose only 2.5% year-on-year, while industrial production rose 3.7%. Both measures fell short of expectations, falling short of June’s figures of 3.1% and 4.4% respectively. The overall unemployment rate stood at 5.3% in July, up from 5.2% in June.
Following the announcement, China’s 10-year government bond yield fell 0.05 percentage points to 2.572% on Tuesday, while the yuan fell 0.4% against the dollar to 7.2864. The benchmark CSI 300 Index, which consists of listed stocks in China’s Shanghai and Shenzhen, fell 0.5 percent.
Excluding China’s youth unemployment rate would further complicate the task of parsing the country’s economic data, which analysts say has become more difficult in recent years.
National Bureau of Statistics spokesman Fu Linghui said labor statistics needed to be “sophisticated and optimized.”
The People’s Bank of China (PBOC) on Tuesday cut the one-year medium-term lending rate, which affects lending to financial institutions, by 15 basis points to 2.5%. The rate was also cut by 10 basis points in June and is now at its lowest level since the policy began in 2014.
The Chinese government has failed to launch a large stimulus package, but further reductions in borrowing costs for businesses and households are expected next week. The central bank also cut the seven-day reverse repo rate, which manages short-term bank liquidity, by 10 basis points to 1.8% on Tuesday.
“The market had expected to wait until September for the PBOC to ease again,” ING’s head of Asia-Pacific research Robert Carnell said in a note. It suggests that there is,” he said. .
“If it’s not there, it must be bad news,” he said of the unemployment numbers.
Concerns about slowing growth in the property sector have resurfaced in recent days after Country Garden, China’s largest private homebuilder, failed to pay its international bonds. Companies affiliated with Zhongzhi, a major domestic conglomerate, have also failed to pay their investment products.
Official data on Tuesday showed new construction starts fell 24.5% in the first three months of the year compared to the same period last year. Property investment fell 8.5%, worsening from a 7.9% decline in the first half.
Additional reporting by Andy Lin of Hong Kong and Hudson Rocket