China’s stock market was in decline and its currency was unstable in February 2016. Zhou Xiaochuan, the head of the central bank, announced measures to make it easier to obtain home mortgages. This led to a surge in construction and lending by China’s banking system. The move proved effective, with growth picking up and financial markets stabilizing. However, in the midst of another economic downturn, China is finding it much harder to borrow and invest its way back to strength. Despite calls from regulators for more loans and financial support, demand for borrowing has weakened, impacting the effectiveness of looser lending policies. The real estate market has stalled, with numerous developers defaulting on bonds and leaving behind unfinished apartments. Companies are hesitant to borrow for expansion due to declining sales, while local governments are struggling with debt. China’s traditional method of stimulating the economy through credit booms and leveraging has reached its limits. Western economists have urged China to reduce its high rate of savings and investment and encourage more consumer spending. However, China has failed to strengthen its social safety nets, making it difficult for households to save less. Direct spending on a national scale is not favored by the Chinese government, which opposes excessive social spending. Real estate is at the core of China’s economic troubles, representing a significant portion of the country’s economy and household savings. Demand for new apartments has plummeted, and prices have fallen. Economists suggest cutting interest rates to stimulate the property sector and ease financial woes for companies and local governments. However, this approach carries the risk of capital flight and a further decline in the renminbi. China faces the challenge of finding a balance between exporting its way out of economic trouble and addressing concerns from other countries about job losses. Cutting interest rates is seen as necessary but requires careful consideration.