China’s surprise interest rate cut, economic slowdown causes oil prices to fall

The July data signaled that the post-lockdown recovery is speeding along amid a range of economic challenges, including the lingering threat of the coronavirus pandemic. Similar to the conflicting priorities facing central bankers from other nations, Chinese officials are looking at rising debt and inflation. But a booming domestic economy seemed to take priority.
“The [People’s Bank of China] seems to have decided it now has a more pressing problem: the latest data shows weak economic momentum in July and a slowdown in credit growth, which has been less responsive to policy easing than during previous economic downturns, says Julian Evans-Pritchard, an economist who covers China for economic research firm Capital Economics.
China’s move to stimulate the economy through monetary policy soured Wall Street. The Dow Jones industrial average fell 38 points or 0.4 percent to start the trading session. The broader S&P 500 lost 16 points, or 0.4 percent, while the tech-heavy Nasdaq fell 34 points, or 0.3 percent
The People’s Bank of China cut its medium-term lending rate to 2.75 percent, or 10 basis points, the first reduction since January. The move came as fresh data showed a slowing national economy, as policies designed to contain Covid-19 infections and a property crisis stalled growth.
“The momentum for economic recovery has slowed,” government spokesman Fu Linghui said at a news conference, the Associated Press reported. “More efforts are needed to consolidate the foundations for economic recovery.”
For months, some home buyers in China have refused to pay the mortgage on properties they have bought, but that the developers have not yet finished building. The mortgage protests are linked to more than 100 delayed projects, leading to falling home prices and frustrated home buyers. The boycotts have raised concerns that the property market in China could collapse, undermining the country’s financial system and dealing a blow to the global economy.
For more than a decade, construction and real estate have helped fuel China’s astonishing economic growth and bolster a burgeoning middle class, underscoring the importance of the mortgage crisis and the damage it can cause.