Angela Huyue Zhang

LONDON – When it comes to economic slowdowns, things often get worse before they get better. This is being borne out in China, following the government’s introduction in late September of its biggest stimulus package since the COVID-19 pandemic.

The government’s announcement took many by surprise, but abrupt policy shifts are nothing new for China. The regulatory crackdown on the internet sector in 2021, the end of the zero-COVID policy in 2022, and the changes to fertility rules since 2014 were similarly sharp reversals.

In my recent book, High Wire: How China Regulates Big Tech and Governs Its Economy, I explain that Chinese policymaking has three defining features: hierarchy, volatility, and fragility. Sudden and dramatic policy shifts are made possible by China’s centralized decision-making structures, in which policy is dictated from the top down (hierarchy). Policies tend to follow a cyclical pattern, with often-sharp swings between tightening and easing (volatility). And, even when well-intentioned, they often generate unintended consequences, which may take so long to materialize that, by the time the authorities grasp them, reversing course carries high costs (fragility).

China’s delayed response to the looming threat of deflation fits squarely within this pattern. Though the warning signs have been apparent for more than a year, the government was........

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