During the global financial crisis beginning in the latter half of 2008, macroeconomic stabilisation policies in most countries were put to the test. China was no exception. The stimulus applied in China was one of the largest, and arguably one of the more successful, allowing Chinese growth to continue at an impressive pace notwithstanding the substantial drag on the economy from the rest of the world.

This period provides something of a case study in the operation of macroeconomic policy in China, with most of the levers of policy being applied to maintain growth. Empirical evidence suggests that the stimulus added around 2-3 per cent to the level of GDP in both 2009 and 2010. As the world emerges from the crisis, the challenge for China is to unwind the stimulus and refocus on policies that will improve the structure of the economy in the longer term.