Beijing has been trying to pare down the country’s dependence on borrowing, which helped fuel heady growth in recent years but left big debts on the balance sheets of major corporations and local governments. Reducing that dependence could help prevent major problems down the road, but at the cost of slower growth in the near term.
Some recent signs had suggested that China’s slowdown was easing. November figures for industrial output and retail sales had indicated the economy was strengthening. The property market, an essential part of the Chinese economy that in recent months had been holding back growth, also appeared to be improving.
Other economies, too, have shown signs of stabilization in recent weeks. The European Central Bank held rates steady last month in a vote of confidence that further stimulus was unnecessary. In the United States, recession fears have eased since reaching a fever pitch last summer.
But other signs still indicate weakness. The China Beige Book, an economic consulting firm, pointed in its December report to slowing growth in new orders and ramped up borrowing by Chinese companies. “With China’s economy seeing record levels of corporate borrowing,” it said, “is this as good as it gets?”
The Chinese economy has also been hit by Mr. Trump’s trade war. Higher tariffs have made it more expensive to sell Chinese-made goods to American customers, denting China’s factory activity and consumer confidence there. A likely trade truce could limit the damage but still leave many tariffs in place.
In the cut announced Wednesday, economists see Beijing as trying to find middle ground between supporting economic growth without resorting to more aggressive steps that could rev the economy further but saddle the country with even more debt.
As a result, China’s headline growth figures are widely expected to slow further, though at a measured pace. In the first three quarters of 2019, its output grew 6.2 percent compared with a year before. Still, economists take those figures with a deep amount of skepticism because they tend to be smoother and steadier than those issued by other countries, and they usually hit official targets.
Carlos Tejada and Ben Casselman
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