China first out of global financial crisis, says leading expert

Jul 28, 2009
China

China is the first major economy to start emerging from the global economic crisis, according to Dr Nicholas Lardy, Senior Fellow at the Peterson Institute for International Economics at Washington DC. This recovery is a result of the early, well designed, and large scale policy response to the crisis by the Chinese government.

Dr Lardy, who gave the keynote address at the Inaugural Chinese Economic Association (Europe) Conference at University College Dublin on 23 July 2009, also highlights that China avoided the proliferation of sub-prime loans and other 'so called' innovative financial products that plunged Western economies into the financial crisis.

“The Chinese regulator also discouraged domestic financial institutions from acquiring these products from foreign financial firms. And as a result, when the financial crisis struck, Chinese financial institutions suffered no significant losses,” he says. “In China, there is no need for de-leveraging since household, financial sector, and government debt is very modest.”

With strong domestic , Chinese banks are now expanding lending while banks in other major economies are scrambling to raise additional capital and are shrinking their balance sheets to try to meet regulatory capital adequacy standards.

According to Dr Lardy, China has accelerated its program to encourage a transition to more consumption led growth. Government social expenditures have expanded dramatically in the past two years and continue to increase in 2009. “Eventually this will reduce the precautionary demand for savings by households and lead to more rapid consumption growth and a rising share of consumption in gross domestic product,” he explains.

As the first large economy to converge back toward its long term potential growth path, Dr Lardy considers that China is in a position to ‘soon’ overtake Japan as the world’s second largest economy.

Ireland is one of many economies currently expanding its links with China. “We are committed to working with the Irish government, businesses and academia to develop stronger educational, cultural and commercial links between China and Ireland,” says Dr Liming Wang, Director of the Irish Institute for Chinese Studies at UCD.

and the changing landscape of the world economy, the Inaugural Chinese Economic Association (Europe) Conference was attended by the Minister for Science, Technology & Innovation, Mr Conor Lenihan TD.

Provided by University College Dublin

Explore further: Moving to the 'burbs is bad for business: Study reveals a surprising truth about location

add to favorites email to friend print save as pdf

Related Stories

U.S.: China must 'crack down' on piracy

Nov 14, 2005

The Chinese government must "crack down" on piracy and enforce intellectual-property rights, the top U.S. trade official said Monday in Beijing.

New study reveals the financial effects of stroke in China

May 07, 2009

A new study has found that families in China face considerable economic hardship following stroke, and it is not uncommon for health care costs to push families below the poverty line. The large study shows over 70% of stroke ...

Recommended for you

'Patent trolls' jeopardize innovation, study finds

6 hours ago

(Phys.org) —New research co-authored by a Naveen Jindal School of Management accounting professor suggests that companies that don't manufacture goods or products but sue companies that do threaten innovation and economic ...

Sustainability reporting falling short

7 hours ago

Once on the fringe of institutional investors' considerations, reporting on environmental, social and governance related issues is now common practice among major listed companies.

Marcellus drilling boom may have led to too many hotel rooms

Sep 18, 2014

Drilling in Pennsylvania's Marcellus Shale region led to a rapid increase in both the number of hotels and hotel industry jobs, but Penn State researchers report that the faltering occupancy rate may signal that there are ...

Entrepreneurs aren't overconfident gamblers

Sep 17, 2014

Leaving one's job to become an entrepreneur is inarguably risky. But it may not be the fear of risk that makes entrepreneurs more determined to succeed. A new study finds entrepreneurs are also concerned about what they might ...

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

just_doug
not rated yet Jul 28, 2009
This has got to be one of the unintentionally funniest things I've read in a long time. Dr Lardy will be right up there (or down there) with Irving Fisher's permanent plateau of prosperity comments before the '29 crash.

The beauty of the internet is you can find out from people on the scene what's really going on rather than relying on fudged government numbers. It isn't pretty.