China's Economic Resilience Amidst Challenges: Central Bank Holds Steady

China's central bank maintained its key lending rate at 2.5% to avoid loosening credit as manufacturing and real estate sectors showed continued weakness in May. Despite a 5.6% drop in factory output and a significant decline in property investments and home sales, the government emphasized ongoing efforts in high-tech industries and consumer spending strategies to support economic recovery.

PTI | Bangkok | Updated: 17-06-2024 15:14 IST | Created: 17-06-2024 15:14 IST
China's Economic Resilience Amidst Challenges: Central Bank Holds Steady
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China's central bank kept a key lending rate unchanged on Monday, forgoing a credit loosening amidst persistent weaknesses in the manufacturing and real estate sectors of the world's second-largest economy. The central bank held its 1-year medium-term lending facility loan rate at 2.5%, in line with expectations.

Instead of lowering already low interest rates, Beijing directed spending towards high-priority areas like high-tech industries. Data for May revealed a slowdown, with factory output falling 5.6% from the previous year and property investments plummeting 10%. Home sales also dropped by 30.5%, and prices in major cities like Beijing and Shanghai declined by 3.2%.

Analysts, including Lynn Song of ING Economics, noted the disappointing data, highlighting the lag in policy support impacts. Despite these challenges, Liu Aihua, spokesperson for the National Bureau of Statistics, emphasized the underlying strengths of economic recovery, citing rising retail sales and investments in high-tech sectors. Further policies are anticipated to support the struggling real estate market, aiming to bolster consumer confidence and spending.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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