The Chinese have typically responded to recessions in the past by shoveling money at state-owned enterprises and by planning and building massive new infrastructure projects. That doesn’t appear to be happening today. Why?
The Economist suggests that the government is afraid of generating too much activity too soon and creating a second wave of the virus. That may be part of it, but I think a bigger part is the evolution of the Chinese economy, even since 2008. There are fewer big infrastructure projects to be built; public works projects don’t necessarily create huge number of jobs in an advanced economy driven largely by services and domestic consumers; and state-owned enterprises aren’t the cutting edge of the Chinese economy in 2020.
Given the absence of an adequate safety net, the predominance of private businesses, and the problems with exporting to countries that are still struggling with the virus, the government would be wise to send money directly to workers and consumers instead of relying on the old recession remedies. Will Xi listen to me? I’m guessing not.