China cuts benchmark lending rate amid real estate crisis

China’s central bank cut its benchmark lending rate Monday for the second time this year to cope with a real estate crisis, after major property developer China Evergrande Group filed for bankruptcy in a U.S. court last week.

The People’s Bank of China said it has lowered the one-year loan prime rate by 0.10 percentage point to 3.45 percent, following a cut in June. The five-year loan prime rate — the benchmark mortgage interest rate — was left unchanged at 4.2 percent.

The world’s second-largest economy has struggled to recover from the fallout of its stringent “zero-COVID” policy involving lockdowns and quarantines that ended earlier this year.

The real estate market, which accounts for some 30 percent of China’s gross domestic product, has been battered by the COVID-19 pandemic as well as Beijing’s tighter control to prevent the sector from overheating.

Evergrande, based in southern China’s Guangdong Province, said last month it was saddled with 2.44 trillion yuan ($334 billion) in total liabilities at the end of 2022.

By Usmana Kousar