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China said it would stop publishing data on youth unemployment, weeks after the measure reached a record high, in a sign of mounting pressure on policymakers as new data indicated a weak recovery in the world’s second-largest economy.
The People’s Bank of China also unexpectedly cut its benchmark interest rate on Tuesday by the largest margin since the start of the coronavirus pandemic, in another sign of official concerns about losing momentum after months of lifting Covid-19 restrictions.
Beijing faces a range of economic challenges, including a liquidity crisis in the real estate sector, a sharp decline in exports, declining foreign investment, and persistent weak consumption.
The youth unemployment rate, which China began reporting in 2018, was 21.3 percent in June, but the figure was not included in Tuesday’s release of broader data for July. The report came in significantly below expectations and showed slowing growth in retail sales and industrial production, two intended drivers of the country’s economic recovery.
Retail sales added just 2.5 percent year-on-year in July, while industrial production expanded 3.7 percent. Both measures missed expectations and were lower than the June figures of 3.1 and 4.4 percent, respectively. The overall unemployment rate was 5.3 percent in July, up from 5.2 percent in June.
The yield on China’s 10-year government bonds fell 0.05 percentage point to 2.572 percent on Tuesday after the announcement, while the renminbi slipped 0.4 percent against the dollar to 7.2864 yuan. China’s benchmark CSI 300 index of shares listed in Shanghai and Shenzhen fell 0.5 percent.
Excluding China’s youth unemployment rate would exacerbate the challenges of analyzing the country’s economic data, which analysts say has become more difficult in recent years.
Fu Lingwei, a spokesman for the National Bureau of Statistics, said labor statistics should be “advanced and improved.”
The People’s Bank of China (PBoC) on Tuesday cut the rate of its one-year medium-term lending facility, which affects loans to financial institutions, by 15 basis points to 2.5 percent. The price, which was also cut in June by 10 basis points, is now at its lowest level since its launch in 2014.
While Beijing stopped short of unleashing significant stimulus, further cuts in borrowing costs for businesses and households are expected next week. The central bank on Tuesday also cut the seven-day reverse repo rate, which manages short-term bank liquidity, by 10 basis points to 1.8 percent.
“The market had been expecting the People’s Bank of China (PBoC) to wait until September before easing again, and today’s cuts suggest that authorities are increasingly concerned about the state of the macro economy,” Robert Carnell, head of Asia Pacific research at ING, wrote in a note. .
“If it’s not there, it must be bad news,” he said of the unemployment figures.
Fears of slowing growth in the property sector, crippled for two years by dozens of developer defaults, have been renewed in recent days after Country Garden, China’s largest private homebuilder, defaulted on an international bond payment. Entities linked to Zhongzhi, a large domestic conglomerate, have also defaulted on payments on investment products.
Official data showed, on Tuesday, that new construction fell 24.5 percent year on year in the January-July period. Real estate investment fell 8.5 percent, compounding a decline of 7.9 percent in the first half.
Additional reporting by Andy Lin and Hudson Lockett in Hong Kong