China’s central bank cuts key rate as growth slows; youth unemployment keeps climbing

China’s economic growth was unexpectedly weak last month, prompting the central bank to cut a key interest rate to spur business activity, while unemployment among young job seekers continued to climb to a record high.

- Aw Cheng Wei

Retail sales in the world’s second-largest economy were particularly subdued as the country’s growth outlook remained cloudy, weighed down by the uncertainty of the Covid-19 pandemic.

Latest data yesterday showed that industrial production, which refers to activities in the manufacturing, mining and utilities sectors, grew 3.8 per cent last month from a year ago – below the expectations of economists.

A Bloomberg survey predicted a 4.3 per cent increase, while analysts polled by Reuters expected a 4.6 per cent rise. The latest figure was also lower than June’s 3.9 per cent rise from a year ago.

Similarly, retail sales also disappointed economists – recording a 2.7 per cent year-on-year rise last month – almost half of the 5 per cent growth that polls by both Bloomberg and Reuters predicted.

This was lower than the 3.1 per cent rise in June.

The growth in fixed assets investment – which the central government has relied on heavily this year to boost growth – has faltered.

For the first seven months of this year, the gauge for expenses on infrastructure, property, machinery and equipment grew 5.7 per cent from a year ago.