HONG KONG: As the first major economy to defeat Covid-19, China is now taking the world lead in developing pandemic-driven economic stimulus efforts.
Unlike the United States and Europe, which still flood its economies with liquidity and spending, China has begun to curb credit in some corners.
The change puts China at the forefront of facing a challenge that other economies will face in the coming years as their economies recover: how to pull the stimulus without stifling growth or causing wider market instability.
China’s policymakers have expressed concern over an overheating of the real estate market and want to avoid major imbalances. They also want to resume a multi-year campaign to curb the debt that began to build during the previous global recession.
If mishandled, China’s hardening could jeopardize its recovery, which would affect the world economy. China’s plans could also create broader problems if they triggered more delinquency or greater correction in China’s stock markets, at a time when global investors are already nervous.