China’s fiscal and monetary policies will likely be decently stepped up, but not necessarily in the same way that they did during the global financial crisis.
The$ 4 trillion yuan stimulus package at the time was 4 trillion yuan, or 11 % of GDP in 2008. Despite having a higher state loan, it was a significant boost to China’s home demand, primarily due to the expansion of funds and investment in infrastructure. China imported more goods and commodities, easing the need shock’s way across the world.
For two reasons, things are different this day.
Second, the Chinese government has set the tone for a slow-moving economic growth rate and is more involved with debt than before.
China now emphasizes “high-quality development” while setting a more confusing growth goal of “around 5 %” compared to the previous time. China’s Communist Party’s main newspapers, the People’s Daily, stated in an article from December 2024 that it is not necessary to adhere to a particular growth rate. There is less reliance on credit expansion and local authorities debt restructuring, but there is also a stronger emphasis on challenges.
Support for a piecemeal approach may be limited due to Mr. Trump’s plan focus on long-term “high-quality development,” which is in line with his demands. It’s unlikely that China’s economy will suddenly rise, especially given the challenges brought on by its deteriorating people and depressed real estate markets.