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The Effects on Developing Countries - China

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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The Effects on Developing Countries - China

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  1. The Effects on Developing Countries - China

  2. I chose this topic because…… Economics is fun Heard and read stuff about financial crisis Wondering why was some better off than others?

  3. 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

  4. 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

  5. Export Import

  6. 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

  7. GDP (real growth rate)(%)

  8. 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)

  9. 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)

  10. Impact of Financial Crisis of 2008 on China • Investment in the US • US Decreasing in Demand

  11. 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)

  12. China’s $586 Stimulus Package • Housing • Rural Infrastructure • Transportation • Health and Education • Environment • Industry • Disaster Rebuilding • Incomes • Taxes • Finance Reference: (Chiu, 2008)

  13. 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)

  14. 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～～ ～

  15. 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

  16. 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

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