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Outline the way that China has been affected by the recent financial crisis of 2008 and subsequent recession. Explore their econ - Essay Example
Author : epfannerstill
Finance & Accounting
Pages 6 (1506 words)
[Your Name] Outline the way China has been affected by the recent financial crisis of 2008 and subsequent recession. Explore the economic, political and socioeconomic consequences. Assess the intervention and response of the government and evaluate if these have been adequate from your point of view…
In 2008, the problem was in the sub-prime market in major investment banks in Wall Street. The turning point in 2008 in the crisis was the fall of Lehman Brothers. The world was soon involved in this crisis as many government rushed to implement nationalization policies in their countries to prevent further damage. A number of bad debts also arose during this period because there was a great deal of selling of financial assets with the mortgages that were given out and they were sold all over the world but this became a complex procedure as more and more countries were lending and banks and other financial institutions did not have an idea as to how far in the globe their loans were going. A credit crunch arose in the world which led to a break in the lending system in the world as there was no money to give. This had a detrimental effect on the entire world’s economies including China (Krugman 2009). A fall in output occurred due to the burst of this real estate bubble. This lead to nationalization all over the world as aforementioned and governments made failed attempt after failed attempt to assuage the situation. The government injected more and more money in the economy because demand had fallen and banking systems were trying to hold on. ...