China After the Subprime Crisis: Opportunities in The New Economic Landscape

China After the Subprime Crisis: Opportunities in The New Economic Landscape

Language: English

Pages: 197


Format: PDF / Kindle (mobi) / ePub

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.

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adverse than before. As and when global confidence returns and risk aversion fades, the authorities should shift away from bailouts towards foreclosures of bad banks. Foreclosures will lay the foundation for the financial market and economic recovery. First, foreclosures re-liquefy the economy in a general equilibrium ‘bottom-up’ way, rather than as a ‘top-down’ macro policy stimulus. A bottom-up approach will be more effective as a postsubprime adjustment because the economic risks have tilted

will only strangle financial innovation and the benefits it will bring. Rather, regulators should focus on encouraging and facilitating innovation. Instead of hiring more staff to implement more regulations, they should hire qualified staff to understand the financial complexity of the innovative process and facilitate it by being open to changes and creative ideas. In the end, it all goes back to better regulation, but not more regulations. 10.1057/9780230298965 - China After the Subprime

Obviously, formal jobs are more secure and deliver better income growth than low-paid informal jobs. China’s integration into the global economy implies that the links between global demand and Chinese domestic investment and job growth are much tighter than before. Despite export diversification, the US, Europe and Japan are still the key markets for Chinese exports. A significant slowdown in their growth as a result of the subprime crisis has thus had a bigger than expected impact on China’s

leading status in manufacturing and technological capabilities. All this suggests that American high-tech producers have failed to capitalise on China’s demand, which has been the only major source of demand growth in recent years. This can partly be blamed on the US export control policy towards China. In the post-subprime era, while the developed world is stuck with a prolonged adjustment process, China’s economic growth is going to gain more importance on a global scale. American firms can ill

being implemented in neighbouring Inner Mongolia. Private investors have played a key role in the financing, construction and operation of highways in the Yangtze River Delta in the past ten years. In Shanghai, around 70 per cent of highways were 10.1057/9780230298965 - China After the Subprime Crisis, Chi Lo 9780230_281967_11_cha09.indd 150 9/1/2010 3:31:31 PM Risks behind the Opportunities 151 built by private investment. But, since 2009, the Shanghai and Zhejiang governments have closed

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