China’s Reluctance to Spend Is Hampering Its Economic Response to COVID-19

China’s Reluctance to Spend Is Hampering Its Economic Response to COVID-19
A couple walks through a popular shopping mall in Beijing, April 13, 2020 (AP photo by Andy Wong).

Editor’s Note: Every Wednesday, WPR Newsletter and Engagement Editor Benjamin Wilhelm curates the week’s top news and expert analysis on China.

China’s nearly half-century-long run of growth came to a screeching halt earlier this month, as data released by the Chinese government revealed that its once-booming economy shrank year-on-year during the first three months of 2020. It was one of the most remarkable signs of the destruction inflicted on the global economy during the COVID-19 pandemic: an end to an economic boom that had weathered calamities like the Asian financial crisis of the late 1990s, the SARS epidemic of 2003 and the 2008 global financial crisis.

In 2008, China stunned the world when it boosted its economy with a half-a-trillion-dollar stimulus package—the largest undertaken by the country at the time. That decisive response fueled China’s rapid comeback and jump-started the global economy, too. Yet the spending spree also helped to make China one of the world’s most heavily indebted countries.

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