The Global Financial Crisis in Chinese Perspective （Jiang Shixue）
“The financial crisis is not yet over..., but our work so far indicates that our measures are effective. People across the country should be proud of it,"
Wen Jiabao, Chinese Premier,
Interview with Xinhua News Agency, December 27, 2009.
Many Chinese scholars believe that the current global financial crisis, triggered by the
When exports fell, factories in the coastal areas and other parts of
In an interview with the Xinhua News Agency on December 27, 2009, the Premier gave a vivid account of
Due to weak external and domestic demand,
The reason why the Chinese banks can weather the storm is two-fold. On the one hand,
The 2008 central economic work conference on December 8-10, 2008, reaffirmed the government’s anti-crisis policies and pledged to strive for continued economic growth in 2009 through domestic demand expansion and economic restructuring. It was agreed that proactive fiscal policy and moderately easy monetary policies would be pursued in 2009. It was also accepted that the anti-crisis measures should be implemented towards 1) maintaining growth; 2) expanding domestic demand; 3) adjusting economic structures; and 4) improving the living standards of the people. Soon after the 2008 economic work conference, the National Development and Reform Commission, the most important governmental body in China to design and implement economic policies, announced that eight specific and concrete lines of policy would be carried out in 2009: 1) to stimulate domestic demand and expand investment scale; 2) to promote agricultural development by supporting grain production and raising farmers’ income; 3) to upgrade economic structures; 4) to eliminate barriers in the economic system; 5) to export more high-tech intensive and labor intensive products and at the same time import advanced technology and raw materials; 6) to reduce carbon emission and protect the environment; 7) to improve social welfare; and 8) to strengthen institutional building.
In his government work report to the annual session of the People’s Congress in early March 2009, Premier Wen Jiabao set out the economic growth target of 8 percent in 2009. “As long as we adopt the right policies and appropriate measures and implement them effectively, we will be able to achieve this target,” Wen Jiabao said at the Second Session of the 11th National People's Congress. The international press spoke very highly of
The purpose of maintaining the target of 8 percent growth is to control the unemployment rate. For most Chinese, employment is the only way to make a living. If unemployment rises, social tensions will worsen, thus jeopardizing the efforts to build a harmonious society. It is calculated that one percentage point of GDP growth rate can generate one million employment opportunities. Only 8 percent of GDP can absorb the increase of migrant workers and university graduates entering the job market.
According to the 2010 blue book of
During his third official visit to
It is encouraging to see that the 2009 central economic work conference, held in early December 2009, vowed to continue efforts in 2010 to boost domestic demand and control investment growth.
III. What do the Chinese Scholars Say? Predicting a crisis in the making is not an easy job. During a visit to the London School of Economics, the British Queen asked why no one had predicted that the “credit crunch” was about to happen. Then, a group of eminent British economists wrote to her explaining why no one foresaw the timing, extent and severity of the recession. But a few Chinese scholars succeeded in foreseeing that the
Li Shengmin expressed similar views in his speech to the second international conference on economic globalization and development, held in
According to Wang Liqiang, researchers affiliated with RCWS made two important observations in 2007. 1) Economic globalization and high-tech revolution might be able to make it possible for the
Regarding the root causes of the
Ru Xin, former Vice President of CASS, said that the global financial crisis is both a good thing and a bad thing. “It’s a bad thing because the crisis has dealt a heavy blow to the world economy and also to
Some Chinese scholars blame the root cause of the global financial crisis on greed and selfishness inherent in capitalism. As Zhang Jianyun, Associate Professor from the
Some Chinese scholars also consider neoliberalism as the cause of the crisis. Xu Haiyan, an assistant researcher from the Institute of Political Sciences, CASS, said, “The U.S. financial crisis is the inevitable end of the neo-liberal policies pursued by the U.S. government over the past three decades.” According to Xu Haiyan, the major western nations saw their market system and capitalist economic institutions as a “hero” defeating socialism in the
Zhao Lei, a professor from the Southwestern University of Finance and Economics, tried to play down some scholars’ attempt to blame the crisis simply on lack of regulation and supervision, policy mistakes, underestimation of the financial risks, etc. According to Marx’s theory, he argued, the crisis was brought forward by surplus production. “Marx’s framework of analyzing the contradictions of capitalism is not outdated,” said Zhao Lei.
Many Chinese scholars are not for the ideological analysis. They would like to dig out the root cause in the light of policy mistakes on a technical level. Wang Guogang, a professor from the Institute of Finance and banking, CASS, asked the following questions before offering his explanation about the origin of the crisis: Why could only US$1.3 trillion of subprime debt, or 12 percent of total mortgage debt, cause a crisis of enormous magnitude? Why did nobody pay any attention to the long-term drop of the housing price in the
Zhang Min believed that there are three major reasons that can explain why the
Yu Ze, a professor from the People’s
Some Chinese scholars would like to combine the above two categories of examination, i.e., a critique of capitalism from an ideological point of view and an analysis of the policy mistakes in technical dimension, into one. For instance, according to Pang Jinju, a professor from the Nankai University, the U.S. subprime crisis was caused by policy mistakes (low interest rate and fiscal deficit), deficiency of risk management by the financial companies, and a belief in neoliberal theory. However, he said, these factors were not the most important. The deepest root of the crisis was the disparity between excessive expansion of production and a lack of demand with purchasing capacity. “This is the fundamental contradiction of capitalist system where production is socialized but means of production is privatized,” Pang Jinju said.
IV. Concluding Remarks As the Chinese economy has been increasingly integrated with the world, the
- Back _articles: China and the EU: Finding "El Dorado" Together （Jiang Shixue）
- Next _articles: China's airlines facing EU emissions trading crunch （Zhang Min）