China cuts interest rates as economic growth slows

China’s economic performance weakened in the fourth quarter as expenditure plummeted, causing the central bank to decrease its key interest rate for perhaps the first time in recent two years.

The National Bureau of Statistics said on Monday that GDP climbed 4% year over year in the final quarter of 2021, which was better than the 3.3 % gain predicted by economists. Although slower than the previous three months.

Amid the Covid-19 crisis growth in the last quarter fell to 4 also fallout from the Evergrande debt crisis, but annual output increased by 8.1%

To stimulate the economy, the People’s Bank of China (PBOC) announced a 2.85 % interest rate cut on 700 billion yuan (£80.6 billion; $110 billion) in one-year medium-term borrowing facility loans. It would be the first cut like this since April 2020.

According to CNBC, industrial production increased by 4.3 % in December compared to the same month a year ago, exceeding Reuters’ projection of 3.6 % growth. In December, auto manufacturing increased for the first time since April, rising by 3.4 % year over year.

The People’s Bank of China is expected to reduce standard lending and deposit rates by a quarter of a percentage point starting Monday.

The Federal Reserve of the United States has stated that it intends to raise interest rates three times this year.

Chinese exports, reported Friday, surged 29.9% in 2021 over the previous year despite a global shortage of semiconductors needed to make smartphones and other goods and power rationing imposed in major manufacturing areas.