China leaves key lending rates unchanged despite weak economic activity
What's the story
China's central bank, the People's Bank of China (PBOC), has decided to keep its loan prime rates unchanged for the seventh consecutive time. The decision comes despite disappointing economic data and a prolonged slump in the country's real estate sector. According to a Reuters poll, the PBOC kept its 1-year and 5-year lending prime rates at 3% and 3.5%, respectively.
Economic performance
China's economic data falls short of expectations
China's November economic data, which showed lower-than-expected retail sales and industrial output, coincided with the PBOC's decision. Retail sales rose by 1.3% last month from a year ago, missing Reuters's median estimate of 2.8% growth and down from a 2.9% rise in the previous month. Industrial output also missed estimates, rising by 4.8% in November from a year earlier against expectations of a 5% increase. The rise in industrial output is the slowest since August 2024.
Market challenges
China's real estate market continues to struggle
The PBOC's decision also comes amid a prolonged slump in China's real estate market. From January to November, investment in fixed assets including real estate fell by 2.6% year-on-year, deeper than the 2.3% decline expected by economists. New home prices also fell further in November, highlighting the continued deterioration of China's real estate sector.