China keeps lending rate unchanged as data show housing market is still struggling
China has kept a key lending rate unchanged despite signs of continued weakness in the second-largest economy's manufacturing and the property sectors
BANGKOK — China's central bank kept a key lending rate unchanged on Monday, choosing not to loosen credit as data for May showed signs of persisting weakness in the world's No. 2 economy's manufacturing and real estate sectors.
The central bank kept its rate for 1-year medium-term lending facility loans, used as a benchmark for other lending rates, at 2.5%. The decision aligned with expectations: instead of cutting already low interest rates Beijing has focused on channeling spending to areas considered to be high priorities such as high-tech industries.
The government reported Monday that factory output fell 5.6% in May from the year before, slowing from 6.7% in April, though analysts noted some impact due to more work days in this year compared with the year before.
Property investments fell 10% year-on-year and home sales sank 30.5%, suggesting a raft of measures to try to turn around a real estate slump have yet to take hold.
Home prices in major, so-called Tier 1 cities like Beijing and Shanghai, fell 3.2%.
The downturn in the property industry followed a crackdown on excessive borrowing by property developers several years ago. That led many to default on their debts as they meanwhile have struggled to deliver apartments that buyers had already paid for. That also hit contractors and suppliers of building materials, appliances and other household goods.
“This data was certainly on the disappointing side and may ring some alarm bells, as May’s policy support package has not yet translated to a slower decline of housing prices, let alone a stabilization,” Lynn
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