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China Stops Publishing Youth Unemployment Data
China has said it will stop publishing data on youth unemployment, weeks after the gauge hit a record level, in a sign of mounting pressure on policymakers as new data pointed to weakness in the recovery of the world’s second-largest economy.
The People’s Bank of China on Tuesday also unexpectedly cut a benchmark interest rate by the biggest margin since the start of the coronavirus pandemic, in a further sign of official concerns over a loss of momentum months after Covid-19 restrictions were lifted.
Beijing is grappling with a host of economic challenges, including a liquidity crisis in the property sector, a sharp fall in exports, flagging foreign investment and sustained weakness in consumption.
July Economic Data Disappoints Expectations
- Retail sales added just 2.5% year on year in July
- Industrial production expanded 3.7% in July
- General unemployment rate was 5.3% in July
Both metrics missed forecasts and were below June’s figures of 3.1% and 4.4% respectively. The general unemployment rate increased from 5.2% in June to 5.3% in July.
China’s Youth Unemployment Excluded from Data Release
The exclusion of China’s youth joblessness rate will compound the challenges of parsing the country’s economic data, which analysts say has become more difficult in recent years.
People’s Bank of China Implements Interest Rate Cut
The PBoC on Tuesday cut its one-year medium-term lending facility rate, which affects loans to financial institutions, by 15 basis points to 2.5%. The rate, which was also reduced in June by 10 basis points, is now at its lowest level since it was launched in 2014.
While Beijing has stopped short of unleashing major stimulus, further cuts to borrowing costs for businesses and households are expected next week. The central bank on Tuesday also trimmed the seven-day reverse repurchasing rate, which manages short-term banking liquidity, by 10 basis points to 1.8%.
Analysts React to Rate Cuts
“The market was expecting the PBoC to wait until September before easing again, and today’s cuts suggest that the authorities’ concern about the state of the macroeconomy is mounting,” Robert Carnell, head of Asia-Pacific research at ING, wrote in a note.
He added that Tuesday’s rate cuts would be “somewhat helpful” in relieving cash-strapped local governments and property companies but warned it was not “a game-changing outcome”.
Challenges in the Property Sector
Fears of slow growth in the property sector, which has been paralysed for two years by dozens of developer defaults, have been renewed in recent days after Country Garden, China’s largest private homebuilder, missed payments on international bonds. Entities linked to Zhongzhi, a major domestic conglomerate, have also missed payments on investment products.
New construction starts were down 24.5% year on year in the January-July period, official data showed on Tuesday. Property investment dropped 8.5%, worsening from a 7.9% fall in the first half.
Additional reporting by Andy Lin and Hudson Lockett in Hong Kong