China will take steps to spur growth amid a trade war with the United States, but there is limited room for aggressive stimulus in an economy already laden with massive debts and a property market prone to credit-driven spikes, policy insiders said.

China’s deepening economic slowdown has fanned market expectations of a big spending binge, especially if the bruising tariff war with Washington escalates, intensifying pressure on Chinese jobs and threatening social stability.

Such a move, plans for which have repeatedly been denied by China’s top leaders, would come at a price, however — similar moves in the past have quickly juiced growth rates but also buried the world’s No.2 economy under a mountain of debt.

“The room for a strong stimulus is not big, and there are very big risks, because that will rely on a flood of cash and increased leverage in the economy,” said a policy insider.

During the 2008-09 global financial crisis, Beijing rolled out a 4 trillion yuan ($591 billion) spending package to fight a downturn that cost 20 million jobs in a matters of months, quickly reviving growth but also prompting a credit explosion. The obsession of China’s leaders with stability led to policy easing in 2012 and 2015 —a year marked by a stock market crash, a slide in the yuan and sharp capital outflows — that further pushed up debt levels and inflated home prices.

Authorities have taken a raft of pro-growth measures in the past year, in the form of cuts to the levels of cash banks must hold as reserves to spur lending, tax cuts, and efforts to accelerate infrastructure spending.

Still, growth in the world’s second-largest economy weakened to a 28-year low of 6.6% in 2018, and is expected to slow further to 6.3% this year.

Sources have told Reuters that Beijing was planning to lower its growth target to 6-6.5% this year from around 6.6% in 2018.

Some Chinese factories have felt the pinch from higher U.S. tariffs, but there are few signs of a sharp rise in unemployment due to a more resilient services sector and a shrinking pool of workers as a result of the country’s demographic changes. “We should be vigilant about employment pressure, but it’s too early to talk about serious problems,” said a second policy insider.

Debt risk

The current slowdown was caused by China’s deleveraging drive in early 2016, which focused on State firms and local governments before broadening to the financial sector a year later. A crackdown on shadow lending pushed up borrowing costs and made it harder for small firms to get funds.

As the trade war increases headwinds, Beijing’s policy focus has been shifted to supporting growth from reining in debt risks, although top leaders remain worried about long-term systemic risks that could derail the country’s economic ascent. President Xi Jinping said China must be on guard against “black swan” risks, meaning unforeseen events that have extreme consequences, while fending off so-called “grey rhino” events — obvious threats that go ignored.