China's strong capital controls meant most of the
benefit from its monetary and fiscal stimulus was felt domestically. Output had recovered quickly and strongly since the collapse in late 2008. As a result this convinced investors that Asia could provide the engine for global growth while North America and Europe
gradually recovered. But welcome as it was, China's emergency action was not cost-free. The economy lacked the capacity to cope with the size of the stimulus and showed signs of overheating. Policy has been tightened and China is now showing signs of slowing.