China After the Subprime Crisis: Opportunities in The New Economic Landscape
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This book analyzes the post-subprime crisis world from the global, Asian and Chinese perspectives. It dispels some of the myths about the crisis's effects on Asia and China; and exposes the ugly truth of bailout policies and their distortion and hindering of the world's economic rebalancing effort in the post-subprime era.
pursuing quantitative easing), socialise losses (by bailing out financial institutions that are not viable) and support private sector income flows. There are two ways to achieve the latter: ● ● First, by improving the trade balance through cutting imports and boosting exports so that more domestic and foreign spending is received as income by domestic producers; Second, by increasing the fiscal deficit through cutting taxes and increasing government spending so that more income is received by
The start of the great investment outflow Even before the subprime crisis, China’s rapid economic growth had raised its confidence in looking outside its national boundaries for investment opportunities. Rising competition and the drive to maximise profits have raised Chinese awareness of the potential of foreign markets. There is also a rising need to acquire raw materials from external sources to secure domestic growth needs. Hence, Chinese foreign investments have grown rapidly in recent
were still in isolation. China’s integration into the world economy began with international trade, but is increasingly extending into the global finance arena. Take the subprime crisis, for example. To correct the global imbalances that are at the root of this financial debacle, creditor countries have to boost consumption, while debtor countries need to cut their spending. Indeed, the biggest surplus countries, China, Japan and Germany, have embarked on significant domestic stimulus programmes.
30 20 10 0 00 Figure 7.7 01 02 03 04 05 06 07 08 09 10 What does China import? Source: CEIC. 10.1057/9780230298965 - China After the Subprime Crisis, Chi Lo 9780230_281967_09_cha07.indd 117 9/1/2010 3:31:04 PM 118 China After the Subprime Crisis Generally, ATP, as defined by the US government, includes ten industry groups, namely Biotechnology, Life Science, Opto-Electronics, Information & Communications, Electronics, Flexible Manufacturing, Advanced Materials, Aerospace,
bilateral, based on the premise that America could still compel China to change its policies and economic behaviour. The SED has been renamed the Strategic and Economic Dialogue (SaED) by the Obama government, but is not materially different from its predecessor, because it is still purely bilateral. The SaED is chaired by both the Treasury Secretary and the Secretary of State. Yet the US administration still assumes it has the clout to force upon China the political and economic changes that the