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The Effects on Developing Countries - China. I c hose this topic because……. Economics is fun. H eard and read stuff about financial crisis . Wondering why was some better off than others?. Outline Brief Introduction of Facts of China Initial Conditions of China (before Financial Crisis)

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Presentation Transcript
slide2

I chose this topic because……

Economics is fun

Heard and read stuff about financial crisis

Wondering why was some better off than others?

slide3

Outline

  • Brief Introduction of Facts of China
  • Initial Conditions of China (before Financial Crisis)
  • Brief Explanation of the Impact of Financial Crisis of 2008 on China
  • China’s Reaction to Financial Crisis
  • Possible Outcomes (issues) and Solutions

Thesis Statement: China is a fast emerging country from the recession of the world Financial Crisis of 2008 through abiding its sets of agendas and proper self-adjustments both before an economic catastrophe and the aftermath of it.

Case Study - China

slide4

Facts of China-

  • Largest Exporter
  • China $1.506 trillion (2010 est.) #2 (behind EU)
  • US $1.270 (2010 est.) #4
  • Imports
  • China $1.307 trillion (2010 est.) #3
  • US $1.903 trillion (2010 est.) #1
  • Reference: CIA World Factbook
slide5

Export

Import

slide6

Facts of China-

  • GDP (real growth rate) –
  • China 10.30% (2010 est.) # 7
  • US 2.7% (2010 est.) # 138
  • Taiwan 10.50% (2010 est.) #6
  • European Union 1.8% (2010 est.) #154
  • Debt - External
  • China $406.6 billion (31 December 2010 est.) #23
  • US$13.98 trillion (30 June 2010) #1
  • Reference: CIA World Factbook
slide8

Initial Condition of China

Highly administrative – Government controls the flow of loanable funds

High interest rate– Higher saving

Comparison of BRIC countries and world average savings rate

(Share of total savings to Gross National Income (GNI)(%)

1990 2000 2001 2002 2003 2004 2005 2006

China 40 37 38 41 44 47 51 54

Brazil 19 14 14 15 16 19 17 18

India 22 26 26 27 29 32 33 34

Russia 30 37 33 29 30 31 32 31

World 22 22 21 20 20 21 21 22

Reference: ZHANG Xiaojing, TANG Duoduo, LIN Yueqin

(Institute of Economics, Chinese Academy of Social Sciences)

slide9

Initial Condition of China

III. Limited exposure to external risks

Reference: ZHANG Xiaojing, TANG Duoduo, LIN Yueqin

(Institute of Economics, Chinese Academy of Social Sciences)

slide10

Impact of Financial Crisis of 2008 on China

  • Investment in the US
  • US Decreasing in Demand
slide11

When world financial crisis strikes…

Decrease demand for Chinese imports  Chinese job losses  Social and economical unrest

Cuts in interest rate  Encourage lending

Tax cuts  Increase willingness to consume

Monetary stimulus  $586 billion (roughly 4 trillion yuan) stimulus package  Domestic investment increased

Reference: ZHANG Xiaojing, TANG Duoduo, LIN Yueqin

(Institute of Economics, Chinese Academy of Social Sciences),

(Fan, The Jordan Times, 2011)

slide12

China’s $586 Stimulus Package

  • Housing
  • Rural Infrastructure
  • Transportation
  • Health and Education
  • Environment
  • Industry
  • Disaster Rebuilding
  • Incomes
  • Taxes
  • Finance Reference: (Chiu, 2008)
slide13

Possible Outcomes (issues) and Solutions

  • Hasty and wasteful projects
  • Increased government steerage
  • Appreciation of renminbi
  • ======================================
  • Upgrade industrial structure
  • Increase domestic market
  • Reference: (NewYorkTimes, 2008), (Naughton, China Leadership Monitor, No. 29)
conclusion
Conclusion
  • Highly Administrative System
  • High Interest Rate, Reserve Ration
  • Limited Exposure to External Risks
  • Lower down Interest Rate, Reserve Ration  Increase spending
  • Tax Cuts  Save exporting enterprises  Save job lost
  • $586 Stimulus Package  Numerous domestic investments projects (urbanization)  Domestic Market vs. Export Oriented

The End~~ ~

slide15

References:

  • http://chinadigitaltimes.net/2008/12/2008-financial-crisis-and-china/
  • http://www.nytimes.com/2008/11/27/business/worldbusiness/27yuan.html
  • http://www.jordantimes.com/?news=23852
  • http://chineseculture.about.com/od/thechinesegovernment/a/Chinastimulus.htm
  • http://www.gees.org/files/documentation/doc_Documen-03520.pdf
  • http://www.xiaojingzhang.com/pdf/economicrecovery.pdf
  • http://epress.anu.edu.au/china_new_place/pdf/ch09.pdf
  • http://www.imf.org/external/pubs/ft/wp/2009/wp09172.pdf
slide16

References:

  • http://www.bus.indiana.edu/riharbau/harbaugh-chuxu.pdf
  • http://www.nytimes.com/2008/11/19/business/worldbusiness/19yuan.html
  • http://www.china.org.cn/business/2010-07/01/content_20396527.htm
  • http://www.cfr.org/india/financial-crisis-may-worsen-poverty-china-india/p17812
  • CIA Factbook