Research On The Global Financial Crisis And The Impact On The Chinese Economy

What does the financial crisis mean, its types, and its theories,what are the causes of the financial crisis, how does it effect Chinese economy, what is the inspiration to Chinese economy development. These questions led to my thinking. This paper is divided into 4 parts to study the questions above.The first part of this paper is introduction. It mainly summarized domestic and foreign research literatures on the financial crisis.And it also summarized innovation and deficiencies of this paper.The second part analysed the causes of the global financial crisis.It mainly analysed policy mistakes and system vulnerabilities.Policy mistakes included America's interest rate policy, America's exports control policy and China's exchange rate policy. System vulnerabilities included the international monetary system and sovereign wealth funds.The main idea of this part is as following. Frequent changes of America's interest rate policy is the causes of Amirica's housing bubble.The exports control policy caused China-US trade imbalance, it is indirect cause of the global financial crisis.China's exchange rate regime unitary peg to the dollar caused China-US trade imbalance became difficult to mitigate,hidden danger reinforced further. The vulnerability of the international monetary system is emphasizing the circulate fuction and alternate fuction, and ignoring the others.Sovereign wealth funds aggravated excess liquidity of financial markets.The third part discussed what effections have the global financial crisis effected China's economy. The main objects includes the domestic financial market, China's foreign exchange reserves,domestic price level and China's economic growth. Conclusions:The global financial crisis hit residents and enterprises's trading enthusiasm, China's financial market cooling down sharply, transaction volume decreases.China's dollar reserves continue shrunk, foreign exchange reserves's shrinking is transfer of nation wealth. Domestic price became churning. In an open economic condition, Currency excessive devaluation and international trade excessive surplus would cause inflation. From the global financial crisis's influence, China's GDP growthrate in 2009 is 8.7 percent, which is lower than the average level of recent ten years.The fourth part introduced the policy suggestions against the global financial crisis.Conclusions:To improve the national income is an indispensable policy to stimulate consumption. The national income rise is an important symbol of economic development. Keep the competitive advantage of cheap labour is paradoxical to ecomonic tenet as enrich nation and people. Manpower resource is the fundamental productive forces.To inspect how much efficiency of financial capital have made in economic system, is to check out how much finance have driving manpower resource. Governments should establish the legal system of financial supervision as soon as possible to strengthen the market access of sovereign wealth funds. SWF has caused government more like economic people.Public investment chasing profits could unbalance allocation of resources. The government shoulder the duty of supporting poverty area development. Financial hungry means some social activities did not get enough money to support, while there are enough money in the world. Growth without development is meaningless.RMB appreciation will increase the national income level by enhancing the purchasing power of the money. Currency devaluation will cause surplus payment and domestic inflation. Expand imports includes expanding import trade and expanding foreign investment. Expand imports is good help for RMB to improve its international status.Increase the national income is the priority for the market recovery. As long as the proportion of the government control of the nation wealth is still high, the economic crisis will not past.