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61. Sharing the Pain: The Global Struggle Over Savings

Author:
Michael Pettis
Publication Date:
11-2009
Content Type:
Policy Brief
Institution:
Carnegie Endowment for International Peace
Abstract:
In September, the Obama administration imposed tariffs on Chinese tires. In October, the U.S. Department of Commerce announced it would launch an investigation into imports of seamless steel pipes from China. That same month, the U.S. Chamber of Commerce and the U.S.–China Business Council, two groups that in the past have defended Chinese policies, testified to the Office of the U.S. Trade Representative that Chinese contracting rules, technical standards, and licensing requirements were protectionist.
Topic:
Economics, Globalization, Foreign Direct Investment, and Financial Crisis
Political Geography:
China, Middle East, and Asia

62. The Great Regression? Financial Crisis in an Age of Global Interdependence

Author:
Vadim Kononenko, Raimo Väyrynen, Toby Archer, Kristian Kurki (ed.), and Matti Nojonen
Publication Date:
12-2009
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
The financial crisis and the ensuing global economic downturn have been the focal point of news coverage and policy analysis for over a year now, and speculation has been rife about how things will pan out. At one extreme are those who shrug the situation off as a significant yet transient dent in economic development, with marginal repercussions on the global system. At the other end are those touting the crisis as the first step in an epoch-making transition in the global power balance, where rapidly expanding economies like China, Brazil and India will make gains on the hitherto dominant developed nations, shifting the distribution of power in the world. Whatever the eventual outcome, there is no denying that the crisis's impact on international relations will be significant.
Topic:
Economics, Globalization, Power Politics, and Financial Crisis
Political Geography:
China, India, and Brazil

63. "Can't Buy Me Love": Will the global economic downturn help Russia consolidate its influence in post-Soviet Eurasia?

Author:
Igor Torbakov and Vadim Kononenko
Publication Date:
09-2009
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
As the Kremlin believes that the global economic downturn is increasing the trend towards greater regionalism, the strategic conclusion is to strengthen Russia's position as the centre of its "own region" - post-Soviet Eurasia. In order to enhance its geopolitical posture in the ex-Soviet area, Russia has been pursuing a two- track policy: it is buying up assets from, and giving out loans to, its distressed neighbours on a massive scale. Several forces appear to be working at cross-purposes with the Kremlin's ambitions: 1) the state of Russia's own economic system; 2) the wiliness and cunning maneuvering of Moscow's "allies"; and 3) the growing competition on the part of the other centres of power - the European Union and China. Ultimately, the Kremlin's desperate efforts to turn Russia into a geopolitical leader of the Commonwealth of Independent States (CIS) are likely to be frustrated by Russia's lack of a coherent long-term strategy and by its socio-political system's dearth of appeal.
Topic:
Globalization and Financial Crisis
Political Geography:
Russia, China, Europe, Asia, and Soviet Union

64. Country Economic Forecasts: China

Publication Date:
12-2008
Content Type:
Policy Brief
Institution:
Oxford Economics
Abstract:
A turn in the domestic investment cycle has been coupled with a dramatic slowdown in external demand, leaving China weathering storms on both fronts. But with the government announcing an unprecedented fiscal package and with fewer structural problems to contend with than in earlier downturns, China is likely to fare better than in previous domestically-driven slowdowns such as in the early-1980s and 1990s.
Topic:
Development, Economics, Markets, and Financial Crisis
Political Geography:
China

65. Global Imbalances and Financial Reform with Examples from China

Author:
Raghuram G. Rajan
Publication Date:
07-2006
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
I will focus on a familiar issue, the problem of global current account imbalances, and will describe how financial sector reform can help narrow them, using examples from China. The United States is running a current account deficit approaching 6.25 percent of its GDP and over 1.5 percent of world GDP. To help finance it, the United States pulls in 70 percent of all global capital flows. Clearly, such a large deficit is unsustainable in the long run. The current situation has its roots in a series of crises over the last decade that were caused by excessive investment, such as the Japanese asset bubble, the crises in emerging markets in Asia and Latin America, and most recently, the IT bubble. Investment has fallen off sharply since, with only very cautious recovery. This is particularly true of emerging Asia and Japan. The policy response to the slowdown in investment has differed across countries. In the industrial countries, accommodative policies such as expansionary budgets and low interest rates have led to consumption- or credit-fueled growth, particularly in Anglo-Saxon countries. Government savings have fallen, especially in the United States and Japan, and household savings have virtually disappeared in some countries with housing booms. By contrast, the crises were a wake-up call in a number of emerging market countries. Historically lax policies have been tightened, with some countries running primary fiscal surpluses for the first time, and most bringing down inflation through tight monetary policy. With corporations cautious, and governments abandoning the grandiose projects of the past, investment has fallen off. Instead, exports have led growth. Many emerging markets have run current account surpluses for the first time. In emerging Asia, a corollary has been a buildup of international reserves.
Topic:
Financial Crisis, Reform, Finance, Economy, and Deficit
Political Geography:
China, Asia, North America, and United States of America

66. Five Persistent Myths About China's Banking System

Author:
Jonathan Anderson
Publication Date:
07-2006
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Of all the various topics and issues facing observers of the Chinese economy, it is safe to say that none arouses more spirited debate than the role of the financial system, and in particular the state of Chinese banks. Is the mainland on the verge of a financial crisis? Has the recent economic overheating created a new flood of bad loans? Do banks know how to allocate capital, or are they simply quasi-fiscal agencies acting at the mercy of the government? And does the rapidly opening financial system represent a gold mine or a “black hole” for foreign investors? The answers to these questions are not always straightforward, but in our experience the truth lies very much away from the extremes so often presented in the financial press. Chinese banks are by no means “out of the woods,” first and foremost because they remain stateowned institutions, but they are now well advanced from their situation only a decade ago. This means that the economy is protected from the risk of a financial crisis—but, on the other hand, the banking sector is more a sunset industry than an exciting growth sector. There are a number of myths about banks and the financial system in China but the following are the most important and most persistent: (1) China’s cost of capital is far too low; (2) Mainland banks are unreconstructed quasi-fiscal agencies; (3) Bank recapitalization is a sham; (4) Banks are already “out of the woods”; and (5) The Chinese banking system is an exciting growth industry. Let us now examine these five myths.
Topic:
Economics, Financial Crisis, Finance, Economic Growth, and Banking
Political Geography:
China and Asia