Table of Contents
Economics Research International
Volume 2012 (2012), Article ID 961694, 6 pages
http://dx.doi.org/10.1155/2012/961694
Review Article

The Effects of the Global Financial Crisis on China's Financial Market and Macroeconomy

1Claremont Institute for Economic Policy Studies, Claremont, CA 91711, USA
2Claremont Graduate University and Claremont McKenna College, Claremont, CA 91711, USA
3Milken Institute, Santa Monica, CA 90401, USA

Received 21 November 2011; Accepted 11 December 2011

Academic Editor: Richard C. K. Burdekin

Copyright © 2012 Linyue Li et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This paper provides a brief review of the increasing importance of China in the world economy and discusses the spillover effects of the global financial crisis on China's financial markets and macroeconomy. It presents and critiques alternative ways of estimating these effects. Contrary to much popular discussion, China was hit fairly hard by the global recession generated by the financial crisis. It suffered a huge drop in exports, and these effects on the economy were only partially offset by China's huge stimulus program. While growth remained well above international averages, its drop was of the same order of magnitude as for the United States. The paper closes with a brief discussion of some of the major challenges facing China to rebalance its economy in order to sustain high growth.