As China’s leadership steps on the economic-stimulus gas pedal, there’s one image in the rear-view mirror that looms large.

Then-Premier Wen Jiabao’s cabinet unveiled a $586 billion program to boost growth in the depths of the 2008 global credit turmoil, a move that opened the floodgates for a record debt surge that current Premier Li Keqiang and President Xi Jinping have had to cope with.

Unlike that binge, Li and Xi are opting for targeted measures, more of which were unveiled last week. They included a tax cut for vehicle purchases, a reduction in the minimum down payments for first-time home buyers and a pledge of support for electric-car sales.

While, like last time, much of this year’s growth campaign is dedicated to new infrastructure including roads and rail, the financing and approval has greater input from the central government. Much of the funding stems from new construction bonds backed by central authorities, rather than bank borrowing by local government financing vehicles -- a difference that may help restrain the buildup of further bad debt.

"The more cautious approach towards stimulus reflects concerns among Chinese policymakers about the massive expansion in credit that occurred in China during 2009-2010, which has created significant new imbalances and problem loans in the Chinese financial system," said Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight in Singapore.

David Fuller's view

So many commentators are worried about China but this looks to me like a sensible monetary adjustment, relative to what China has seen since 2007.  In 2008, Premier Wen Jiabao’s cabinet panicked over the USA’s severe financial crisis.  This was understandable, perhaps, but a $586 billion stimulus programme proved to be vastly excessive.  Moreover, dolled out regionally it was a recipe for overbuilding and corruption on an unprecedented scale.

On realising this, Wen Jiabao and his colleagues feared a worse stock market bubble than occurred in 2007.  They prevented that but had to rein in a property bubble.  In 2014 China’s new president Xi Jinping created another stock market bubble by failing to put any sensible limits on the use of margin trading.  It had to be reined in a year later.  Now we are about to see if investor confidence is returning as China’s mainland stock markets reopen following their holiday.  That would be nice but I am holding my breadth.