US Financial Crisis: The Chinese Connection


Code : ECC0012

Year :

Industry : General Business

Region : US

Teaching Note: Available

Structured Assignment : Available

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China and the US: The Economic Tango China was under the leadership of Mao Zedong (Zedong), the Communist Party leader until 1976. During his tenure, he wanted to transform the country from a rural economy to an industrial giant. However, after his death, it became evident that his policies had not yielded the desired results. By the late 1970s, China was characterised by a stagnant agricultural sector and poor industrial productivity. As a result, the standard of living had not improved for over 20 years.

Deng Xiaoping (Xiaoping), the successor of Zedong, adopted extensive economic reforms in the late 1970s to improve the country's conditions.He adopted an export-oriented development strategy and encouraged foreign trade through joint ventures. To project the country as a potential destination for FDI, Xiaoping concentrated on providing an excellent environment for companies to set up their operations...

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Financial Crisis and US' Search for Aid The subprime crisis has highlighted the imbalances that exist in the world economy. The imbalance was the result of the high spending rate in the west and high saving rate in the east (Asia, especially China). The current account surpluses ofAsian countries have been rising steadily creating a deficit in the west especially in the US. As a result, Asian countries, particularly China hold vast amounts of foreign exchange reserves...

China's Economic Supremacy over US? As China's Premier Wen asserts his willingness to help the US, several investors and strategists are actually calling upon the country to use the financial crisis as an opportunity to define a new set of financial rules. The US dollar is widely considered as a strong reserve and the US financial institutions expansion across the world was a source of power and prestige forAmerican companies and the US government. However, the crisis has highlighted the loosening of the American grip on global finance. Russian President Dmitry Medvedev observed, "The times when one economy and one country dominated are gone for good...

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