Just as China started to come to grips with the scale of its massive debt accumulation, the impact of the trade war with the U.S. is forcing a retreat.
One expert said that could prove "disastrous" for the country's economy.
Years of big-ticket investment projects helped spur double-digit growth in China's gross domestic product, sending the country into position as the world's second-largest economy — trailing only the United States.
The price tag, however, was a mountain of debt that needed to be drawn down as authorities refashioned growth to a more sustainable model. The plan has been to base the more mature economy on the increasing spending power of China's rising consumer class rather than old-fashioned investments in infrastructure.
But the trade war is denting China's economic growth and forcing a rethink in debt reduction — known as deleveraging — as authorities look for ways to juice the economy to make up for hits resulting from U.S. President Donald Trump's tariffs on Chinese exports.
Economists increasingly see future tariffs as likely to apply to all shipments from China to the United States, meaning Beijing is set to even further loosen financial taps.
That's already been seen in the form of cuts to reserve requirement ratios for banks, which set the amount of funds they must keep on hand. The recent moves mean banks have more money to lend out, stimulating the economy with more debt.
Li-Gang Liu, chief economist for China at Citi, said that a major stimulus announced last month by Guangdong Province, China's export center, that includes tax, land and utilities measures, is a prime example of the new trend in the country.
"Such kind of policy suggests that going forward China's deleveraging has more or less halted," Liu said on CNBC's "Squawk Box" on Wednesday. "We will see more fiscal and monetary stimulus ahead."