CHINA has cut a crucial lending rate in an effort to shore up growth as the world's second-biggest economy is buffeted by repeated coronavirus lockdowns and a worsening property crisis.

The People's Bank of China has reduced its medium-term lending rate, for one-year loans to the banking system, by 10 basis points to 2.75 per cent, the first cut since January. Analysts had expected the central bank to leave the rate unchanged, reports London's Financial Times.

The decision highlighted deepening anxiety in Beijing as it tries to combat a decline in consumer demand triggered by its drawn-out zero-Covid policy, as well as the fallout from cash-strapped property developers and slowing global growth.

Official statistics released reflected worse than expected consumer and factory activity and a rise in youth unemployment to a record 19.9 per cent, piling more pressure on Xi Jinping's administration to reinvigorate the economy.

Retail sales, an important gauge of consumption, rose only 2.7 per cent year on year in July compared to a forecast 5 per cent, while industrial production was 3.8 per cent higher compared to a forecast 4.6 per cent.

Despite Beijing's plans to inject hundreds of billions of dollars of stimulus to boost growth, China's economy only narrowly escaped a contraction in the second quarter.

Experts expect China's economic slowdown to prompt looser monetary policy and fiscal stimulus, but some are pessimistic about the scale and speed of Beijing's response.

China's growth in [the second half] will be significantly hindered by its zero-Covid strategy, the downward spiral of the property markets and a likely slowdown of export growth," said Ting Lu, Nomura's chief China economist. "Beijing's policy support could be too little, too late and too inefficient."

Societe Generale described the July data as "simply bad", with deceleration across production, investment and consumption "under the crushing weight of the zero-Covid policy" and with the "housing sector in free fall".

"China is definitely in a very desperate situation," said Xingdong Chen, chief China economist at BNP Paribas. "The problem now is no effective demand. If you don't allow people to come out and consume, there is no demand."