China: the Central Bank lowers one of its benchmark interest rates to revive real estate
Construction workers in Beijing.
July 2021. (Illustration).
AFP - WANG ZHAO
Text by: RFI Follow
1 min
China's central bank lowers the benchmark interest rate for mortgages by 0.15%.
An unexpected decision, since it is the second drop this year.
The objective is to revive the struggling real estate sector.
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The five-year interest rate fell from 4.6 to 4.45%, the biggest drop for this rate, estimates the financial information agency Bloomberg.
With this measure the Chinese Central Bank hopes to revive sales of new homes, slowed down since the financial setbacks of the sector giant Evergrande.
It should be remembered that real estate and construction account for almost a quarter of Chinese GDP.
Support the economy
Moreover, by reducing this interest rate, the government intends to support the Chinese economy, which has recorded its worst performance for two years.
China is currently facing a resurgence of the Covid-19 epidemic, which has forced the authorities to re-establish strict confinements in several cities.
Measures that have the effect of penalizing business production and household consumption.
Growth target threatened
Analysts fear that these health restrictions threaten the growth target of 5.5% this year set by Beijing.
An important year for President Xi Jinping, who should be reappointed as head of the country in the fall of 2022.
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To re-read: Central banks are easing their policy to support the Chinese and Turkish economy
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