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Why Hasn’t China Rushed to Bail Out Its Economy?

The Chinese government’s reluctance to unveil a massive stimulus package despite the ongoing economic slowdown has puzzled foreign observers and the Chinese public alike. One possible explanation for the Chinese leadership’s cautious approach could be the huge debt overhang from the 2008 crisis.

SHANGHAI – China’s aggregate demand has weakened significantly over the past three years. In addition to the enduring effects of China’s anti-COVID policy, the country has also been weighed down by the decrease in global demand. Exports fell by 14.5% year on year in July, a stark contrast from the robust 17.2% export growth recorded in July 2022. Given these downturn pressures, the government’s reluctance to announce a massive stimulus package, as many had anticipated, has left foreign and Chinese observers deeply perplexed.