As China sees a rapid economic recovery from the recession caused by the pandemic, Chinese authorities are pulling back support for the economy faster than they did following the 2008 financial crisis.
Back then, massive Chinese stimulus during the global financial crisis helped boost the world economy. However, according to senior economist Francoise Huang, China is focusing on handling its own problems, hence will not provide the same kind of global support this time.
China has started a wave of monetary policy easing in January 2020 after an acceleration of domestic Covid-19 cases. The support reached its height nine months later in October, with only 41% of the intensity seen following the financial crisis.
That means China’s coronavirus stimulus program ended three months earlier than the 12-month-long one in 2009, according to the research. China’s economy grew 2.3% last year and was the only major country to expand amid a global recession.
Strict lockdown policies and restrictions on international travel allowed China to return to growth by the second quarter of last year with only pockets of new virus outbreaks.
Stay-home measures and other restrictions on business activity have prompted governments in those regions to enact their own support measures. In particular, the U.S. under President Joe Biden launched a $1.9 trillion stimulus package this month.
That sort of demand for Chinese goods adds to the already resilient domestic economy, giving authorities more leeway to address local problems without being too concerned about hurting growth.
In a sign of how Beijing is taking a moderate approach, the People’s Bank of China on Monday kept its benchmark lending rate at the same level in March for an 11th-straight month. The last time the central bank changed the rate was a cut in April 2020.
People’s Bank of China (PBOC) Governor Yi Gang stated that monetary policy needs to strike a balance between supporting economic growth and preventing risks.