Macro Analysis

Macro Focus: Unveiling China’s macro dilemmas and policy choices

China’s 2020 stimulus was modest. The country’s leadership learned the lessons of the 2009 giga stimulus and the imbalances that stemmed from it. More importantly, we show in this piece that the focus has shifted from credit control/guidance – both traditional and non conventional – to other policy instruments. The main candidate for these new policy instruments is fiscal policy. This should translate into a continuation of the substitution of private debt by government debt going forward.