China’s surprisingly sluggish growth in July drags down global economy

China’s sluggish economy is dragging down the global economy with it. U.S. stocks fell Monday morning after troubling growth numbers from the world’s No. 2 economy. Commodities also fell, with Brent crude and West Texas Intermediate crude both down more than 5% to start the day. The safe haven U.S. dollar, meanwhile, rose amid fears of a global recession.

The downturn was tied to weaker demand as China missed expectations across the board in July, causing the country to cut two key interest rates in an effort to boost economic recovery. On Monday, the People’s Bank of China cut its short-term bank lending rate by 0.1%, the first cut since January.

In July, China retail sales grew 2.7% on an annual basis, far below the 5% analysts expected and slower than the 3.1% recorded in June. Industrial production was up 3.8%, again below the 4.6% analysts expected and a tick down from 3.9% in June.

While overall unemployment held relatively steady in China at 5.4% for July — June’s unemployment rate was 5.5% — a troubling trend reveals one in five Chinese youth is unemployed, setting a record since the nation started tracking the data in 2018. It showed 19.9% of Chinese ages 16-24 were unemployed, up from 19.3% in June. The numbers likely point to a service sector struggling to recover from COVID-19.

China’s economy is being repeatedly rocked by COVID-19 lockdowns and a growing property crisis, with a mortgage-payment boycott contributing to plunging property investment and sales.