Essay on China 's World Wide Crisis Through Contagion

Essay on China 's World Wide Crisis Through Contagion

Length: 1022 words (2.9 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

In 1997 Asia’s ‘miracle economies’ were hit by an unprecedented and unexpected financial crisis, causing falling export growth, currency shocks, declines in productivity and resulting in a US$60 billion IMF bailout. Contemporaries feared that the localised crisis would lead to a world wide crisis through contagion, starting with China due to their considerable intra-regional trade and investment with those countries affected by the crisis. China suffered from the same inherent structural weaknesses that caused the demise of its Asian counterparts, perhaps most clearly seen through its “bank-dominated financial systems, weak central bank regulation and supervision of commercial banks, excessive lending, and a large buildup of non-performing loans (NPL’s).” However China’s performance throughout the crisis was remarkable, achieving GDP growth of 7.8% in 1998, while the lowest rate since 1990, other Asian economies were seeing substantial declines in growth and even negative growth. China’s survival can be attributed to the their strong external accounts, stringent capital controls and the role of the government in Beijing. China still faced slowing growth, real appreciation of the Renminbi and increased risk premiums from investors.

The causes of the Asian financial crisis and explanations of why other Asian countries were affected so greatly is instrumental in understanding China’s success. The foremost theories speculate that the primary cause was poorly regulated and over-leveraged financial institutions, making inefficient loans sparking investor panic. Financial weaknesses were also prevalent in China’s financial system as seen Table 1, China’s bank loans to GDP was very similar to that of Malaysia at 92.7 and considerably hi...

... middle of paper ...

... Between 1995-1997 Chinese exports to the US increased by 8% in the same period Japanese exports declined by 2.4%. Parks argues that the crisis can at least in part be explained by this growth of Chinese exports at the cost of other asian economies, though this is refuted by Sachs and Radelet ‘the impact of the devaluation of the yuan was probably … relatively limited.’ This export growth lead to a constantly increasing current account surplus and the build up of immense foreign exchange reserves thereby enabling China to maintain a pegged exchange rate with the dollar offsetting pressure for nominal appreciation and avoiding a worsening position in the ‘trade war.’ It is possible that China’s survival was not a result of their response to the crisis but ‘the outcome of a long chain of circumstances that allowed Beijing not to be forced into floating its currency.’

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Essay about Trade in China and the Success of its Economy

- Trade in China and the Success of its Economy China has come to the forefront of the international finance scene following the East Asian financial crisis for two reasons. First, the post reform Chinese economy closely resembles the other East Asian countries. China experienced significant levels of growth led by exports, with a rapid expansion in labor-intensive exports in its early stage of development. Rapid growth was accompanied by a rapid increase in domestic savings and massive inflows of foreign capital (Perkins, 1986)....   [tags: Economics China Trade Currency Money Essays]

Better Essays
4758 words (13.6 pages)

The Primary Causes of World War II Essay

- World War II (WWII) was the deadliest and most catastrophic war in human history. Marked by astonishing events such as the Holocaust and the use of nuclear weapons, WWII represented the largest deployment of military forces of the twentieth century. Two factions, the Axis and the Allies, entered into a global military altercation that began with Germany’s invasion of Poland on September 1st, 1939, and finished with the surrender of Japan on September 2nd, 1945. A review of human motives, including the need for revenge, power, and extreme nationalism (jingoism) can explain the roots of WWII....   [tags: Revenge, Power, Jingoism, Analysis]

Better Essays
1214 words (3.5 pages)

Contagion : A Movie For The Young And The Old Essay

- Imagine going to bed one night and everything in your world is perfect and normal; you wake up the next morning and suddenly the world is horrible and everyone is getting sick and dying. How would you feel. That’s how Contagion is. When Mitch Emhoff’s wife comes from Hong Kong and she is very sick. She ends up dying within the first ten minutes of the movie. That’s what makes Contagion different than all of the other mass outbreak stories is that the main character is killed off within minutes....   [tags: Protagonist, Character, Title role, Antagonist]

Better Essays
1139 words (3.3 pages)

Contagion And Vaccines Paper On Ethics

- Contagion/Vaccines Paper on Ethics In a utilitarian ethical system, it’s all about what will benefit the greatest number of people. For quarantining an individual I would do similarly like Contagion, and I would make sure the person was in a room all by themselves so that no one else would be affected. I would also try to come in contact with the people that were around the individual. Since it would be just one individual, I’m not sure that I would alert the media until I knew for sure it was going to be a major outbreak....   [tags: Ethics, Morality, Immanuel Kant, Vaccine]

Better Essays
1382 words (3.9 pages)

The Role Of China 's The Cyber World Essay

- A. Context of the essay: This article talks about the role of china in the cyber world. It talks about the U.S claims about China intruding in all the U.S networks seeking technical advantage and whether the claims are justified or not. This article goes deeply into the current scenario and discusses about different types of cyber threats in case of China. B. Four areas of Typology: The first area in typology deals with Open internet. An internet user should be able to whatever they want in however manner they like online....   [tags: Chinese language, China, War, Internet]

Better Essays
850 words (2.4 pages)

Government and Economics in China Essay

- Introduction China is one of the most populous countries of the world with over 1.3 billion people and covering a geographical area of about 9.6 million square kilometres. It lies on the eastern end of the large Asia continent and enjoys a remarkably long coastline. It has a large economy, given the large population and a wide array of natural resources especially mineral resources which are the backbone of its economy. With a well cultivated constitution that was put in place by the largest political party, the Communist Party of China (CPC), China has reforms underway aimed at closing the otherwise wide gap between the rich and the poor....   [tags: China]

Better Essays
1288 words (3.7 pages)

The Economic Rise of China Essay

- The economic rise of China during the past few years has had the greatest influence on my thinking, especially in respect to economics, finance, my personal values and social responsibility. I was born in Shanghai in the early 1980s when China’s economic reform just began and the nation opened its doors to the outside world. I can still recall the relatively low living standards during my childhood: televisions and vehicles were rare; people seldom dined out; a majority of commuters were on bicycles – there were no subways or highways, even in the biggest city in China....   [tags: China]

Better Essays
1059 words (3 pages)

Democracy in Russia and China Essay examples

- As post-communist countries struggle to modernize and adopt a democratic regime, Russia and China each face obstacles unique to their own political and historical context. The main findings of this paper reveal that economic and political liberalism are closely linked and that economic liberalization facilitates democratization. Thus the shortage (rather than surplus) of economic liberalization has contributed to Russia’s deficit of democracy and has been one of the major obstacles of democratization for Russia....   [tags: China]

Better Essays
1570 words (4.5 pages)

China’s New Nationalism Essay

- No one can deny from recent news that there has been a strong surge of Chinese nationalism, and that this nationalism has turned heads in the international community. The nationalism that the CCP has affected is taking on a life of its own. In its strategy of pragmatic nationalism, the CCP tried to blur the lines between love of country with love of the state and governing body. What has resulted is a whole new breed of nationalism that is very much independent of the Chinese Communist Party and in fact has caused the CCP great concern....   [tags: China]

Better Essays
1537 words (4.4 pages)

China's Future Democracy Essay

- Thesis: In viewing China’s political background, as well as the current state of affairs, it is reasonable to predict that China will eventually become a democracy. History Looking back in history, one of the most dominant figures in Chinese politics in the 1930’s was Mao Zedong. Mao is very well known as the leader of the CCP as well as a dictator. Mao was inspired by revolutionary potential of peasantry and wanted to create a revolutionary strategy that would rely on their strength. During the First Five-Year Plan, a period between 1953 and 1957, some of the goals of the communist Chinese government were to increase heavy industrial production, collectivize light industry and retail enter...   [tags: China]

Better Essays
1837 words (5.2 pages)