If anyone had any doubts about the slowdown in the Chinese economy, the Asian giant's central bank has just dispelled them with an unexpected cut in the medium-term interest rate (one-year loans). The cut was 15 basis points to 2.5%, the second cut since June. The decision comes in an environment full of bad news for the Chinese economy:

• Industrial production grew 3.7% in July, below 4.3% estimated by economists
• Retail sales growth slowed to 2.5%, below expected 4% growth
• Fixed asset investment grew only 3.4% in the first seven months of the year, below the 3.7% expected by economists
• Property investments contracted by 8.5% over the same period
• Bank lending in July fell to its lowest level in 14 years

The July meeting of the Communist Party of China's politburo noted the need to add more fiscal and monetary stimulus to support the economy. This rate cut is one of the first concrete steps in that direction, analysts say.

One of the collateral problems of this strategy is the weakening of the yuan, which this week reached its lowest level since November. With the U.S. Federal Reserve maintaining its rate hike policy, the spread between Chinese and U.S. 10-year bonds is currently more than 160 basis points, the widest gap since 2007, which is causing capital outflows from China.the widest gap since 2007, which is triggering capital outflows from China.