Now, would such a debt level limit China"s space for economic stimulus as suggested? To answer that, one must first understand that China has not taken the old road of excessive reliance on aggressive policy stimulus. In recent years, its ongoing efforts to resolve local government debt, advance debt swaps, and optimize the structures of debt maturity have made marked progress. While these moves may impose short-term constraints on the scale of fiscal expansion, they are systematically defusing risks - thereby laying a far more solid foundation for steady, sustainable growth over the long run.

　　As for the inflation landscape, China"s consumer price index rose 0.4 percent month-on-month in August, reversing a 0.1 percent decline in July, while year-on-year growth picked up to 0.8 percent. The producer price index rose 0.4 percent month-on-month, reversing a 0.7 percent drop the previous month, according to the National Bureau of Statistics. Both gauges indicated overall moderate price increases.

　　Meanwhile, the IMF in July raised its 2026 headline inflation forecast by 0.3 percentage points to 4.7 percent, compared with its April outlook. Despite global inflationary pressure, China"s prices have remained stable. China neither faces the high-inflation constraints that once plagued Europe and the US, nor the policy dilemmas currently confronting many major economies.

　　Crucially, there is still ample room for China"s monetary and fiscal policies. China"s central bank has made clear that the average reserve requirement ratio (RRR) for financial institutions stands at 6.3 percent, leaving room for further cuts. Monetary policy can act flexibly based on actual economic conditions, releasing liquidity through RRR cuts, policy rate reductions, and targeted structural tools.