Off The Wire
China's economy loses steam as COVID-19 erupts, cuts rates
Reuters: China's economy rebounded in 2021 from its pandemic-induced slump helped by robust exports but weak consumption at the year-end and a property slowdown point to cooling momentum and the need for more policy support.
The central bank on Monday cut loan rates to cushion the world's second-largest economy as its confronts headwinds from a rapidly cooling property sector and sporadic COVID-19 outbreaks.
Several Chinese cities went on high COVID-19 alert ahead of the Lunar New Year holiday travel season, as the Omicron variant reached more areas including Beijing.
The economy grew 8.1% in 2021, faster than a forecast 8.0% and well above a government target of "above 6%" and 2020's revised growth of 2.2%.
Gross domestic product (GDP) expanded 4.0% in the October-December period from a year earlier, according to National Bureau of Statistics data, faster than expected but still its weakest pace in one-and-half years. Growth was 4.9% in the third quarter.
On a quarter-on-quarter basis, GDP rose 1.6% in October-December, compared with expectations for a 1.1% rise and a revised 0.7% gain in the previous quarter.
China's economy got off to a strong start in 2021 as activity rebounded but it has lost steam due to a property downturn, curbs on debt and strict anti-virus measures which have hit consumption.
China's central bank unexpectedly cut the borrowing costs of its medium-term loans for the first time since April 2020, leading some analysts to expect more policy easing this year to guard against developers' mounting risk of default.
The People's Bank of China (PBOC) said it was lowering the interest rate on 700 billion yuan ($110.2 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points to 2.85% from 2.95% in previous operations.