China Maintains Benchmark Lending Rates Amid Sluggish Economic Growth
Despite tepid economic indicators and a continued decline in the real estate market, China's central bank has decided to retain its benchmark lending rates, signaling a cautious approach to monetary policy.
ChinaPbocBenchmark RatesReal EstateEconomic IndicatorsReal EstateDec 22, 2025
While the 5-year rate helps set mortgage rates, the 1-year rate serves as a standard for new loans. This decision comes amidst China's November economic data, which included lower-than-expected retail sales and industrial output.
Retail sales increased by 1.3% last month compared to a year ago, falling short of Reuters' median projection of 2.8% growth and declining from the previous month's 2.9% increase. Additionally, industrial production fell short of projections, increasing 4.8% in November from the same month last year, as opposed to projections of a 5% increase. This was the smallest rise since August 2024.
China's real estate market is still suffering from a protracted downturn. Investment in fixed assets, which includes real estate, decreased by 2.6% between January and November compared to a year before. This decline was more severe than the 2.3% decline that experts had predicted. November saw a further decrease in new home prices, indicating the ongoing deterioration in China's real estate market.
The PBOC's decision to maintain the benchmark lending rates reflects a cautious approach to monetary policy, balancing the need to support economic recovery with the risks of overstimulating an already fragile market. While the central bank aims to stabilize the economy, the ongoing challenges in the real estate sector and weak consumer demand continue to pose significant obstacles to growth.
Frequently Asked Questions
What are the current benchmark lending rates in China?
The People's Bank of China (PBOC) has maintained the 1-year lending prime rate at 3% and the 5-year lending prime rate at 3.5%.
How did China's retail sales perform in November?
Retail sales increased by 1.3% in November compared to the same period last year, falling short of the 2.8% growth projected by Reuters.
What is the current state of China's real estate market?
China's real estate market is experiencing a protracted downturn, with investment in fixed assets, including real estate, decreasing by 2.6% between January and November compared to the previous year.
Why did the PBOC decide to maintain the benchmark lending rates?
The PBOC's decision to maintain the benchmark lending rates reflects a cautious approach to monetary policy, aiming to balance economic support with the risks of overstimulating an already fragile market.
What was the growth in China's industrial production in November?
Industrial production increased by 4.8% in November compared to the same month last year, which was below the projected 5% increase.
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