The International Financial Crisis and China: Impacts, Challenges, and Policies

Abstract

The Chinese economy has been severely affected by the global financial crisis triggered by the United States. Chinas imports and exports have been shrinking, and many enterprises closely related to international trade have been shut down. China has also been embarrassed by its US$2.1 trillion foreign exchange reserve and anxious to know how to manage it effectively. As the economic situation has become increasingly gloomy and uncertain, social problems such as layoffs have increased, and social security and social stability have inevitably appeared to worsen. This has caught the attention of the authorities. Public policies have to be adjusted and new policies established, and effective countermeasures have to be planned, so as to enable China to survive the crisis. Fiscal, monetary, industrial, and social policies have been initiated and are expected to work. Though their success is difficult to estimate, those measures nevertheless have manifested the determination of the Chinese government to conquer the current difficulties, as it has promised the people.