China Maintains Steady Lending Rates Amid Economic Weakness

China's central bank, the People's Bank of China, has kept its loan prime rates unchanged for a seventh consecutive month, maintaining the 1-year rate at 3% and the 5-year rate at 3.5%. This decision was made despite disappointing economic indicators, including a 1.3% rise in retail sales for November, which fell short of the expected 2.8% growth, and industrial production growth of 4.8%, below the anticipated 5%.

The country continues to face a protracted slump in its real estate sector, with investment in fixed assets contracting 2.6% from January through November, worse than the 2.3% drop estimated by economists.

New home prices in tier-1 cities have also declined, with a 1.2% drop in November, while resale home prices fell 5.8% year-over-year. Eswar Prasad, a professor at Cornell University, noted that while some stimulus may be necessary, the impact of monetary policy might be limited due to ongoing weakness in the private sector.

The finance ministry plans to issue ultra-long-term special government bonds next year to fund key projects, and there are efforts to boost consumption amid deflationary pressures. The CSI 300 index rose 0.43% on Monday, the onshore yuan remained flat at 7.04 against the dollar, and the offshore yuan slightly weakened to trade at 7.03 against the greenback, according to CNBC.