Economic Crisis (经济危机)
The global economy has brought mutual benefit to all its participants, however any crisis in that economy results in a chain reaction. For instance, even people in China are gradually feeling the crisis that brought on by the Wall Street (华尔街) financial crisis. Chinese industries such as finance, IT, and real estate were the first effected. Manufacturing companies are shutting down and the buying power of the Yuan has weakened. At the end of June 2008, 67 thousand manufacturing companies were shut down in China, and by September, 8.3 million people registered unemployment in cities alone.
Knowing the negative effects an economic crisis can bring to a society, the Chinese government announced today a stimulus package worth about 4 trillion yuan (570 billion U.S. dollars) that will be “spent over the next two years to finance programs in 10 major areas, such as low-income housing, rural infrastructure, water, electricity, transportation, the environment, technological innovation and rebuilding from several disasters, most notably the May 12 earthquake.” The government meanwhile will “loosen credit conditions, cut taxes and embark on a massive infrastructure spending program in a wide-ranging effort to offset adverse global economic conditions by boosting domestic demand.” Hongkong, the financial center of China, will also be fully supported and assisted by the government through the financial crisis.
This is not the only financial crisis during which the Chinese government stepped up to stablize its domestic market in recent history. Looking back, the 1997 Asian financial crisis (亚洲金融危机) happened only a decade ago (and severely damaged the economy and finance in most Asian countries), however, with the prompt plan, Chinese government was able to minimize the effect Asian financial by holding its currency steady.
Although China is still a communist country, as least in terms of one party rule, its economic model is actually a capitalist free market system with government regulation.
This week, I would like you to answer the following questions:
Is the capitalist economic model working under the communist political party leadership in China? Explain why or why not and describe its positive and negative effects.
Reviewing the Chinese stimulus package that includes low-income housing, rural infrastructure, water, electricity, transportation, the environment, technological innovation and rebuilding from several disasters, loosening credit conditions, cutting taxes and embarking on a massive infrastructure spending program in a wide-ranging effort to offset adverse global economic conditions by boosting domestic demand, what kind of effects will this bring to China? Are any of the plans suitable to, or could be adapted by the U.S. and why?
http://news.sina.com.cn/c/2008-10-29/120216548971.shtml
http://news.xinhuanet.com/english/2008-11/09/content_10331324.htm
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