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									THEWORLDTODAY.ORG NOVEMBER 2008
PAGE 6
         CHINA AND THE ECONOMIC CRISIS
         He Fan, CHINESE ACADEMY OF SOCIAL SCIENCES, BEIJING




         Cold Wınter
                                                                        i
         A butterfly flapping its wings in                                          N THE SECOND HALF OF LAST YEAR, WHEN THERE WERE
                                                                                    already clear signals that a severe financial crisis was
         New York may eventually cause a
                                                                                    coming which would trigger a domino effect in
         storm in Beijing. Well, how about                                          international financial markets, China watched from
                                                                                    a distance. Many officials and scholars remained quite
         a devastating tsunami in New York?                                         optimistic, but this was naive. They were misled by
         In the last month, the world has                                   the popular ‘decoupling’ thesis which claimed that developing
                                                                            countries like China are decoupled from the United States
         watched the American financial                                     economy and could achieve robust growth independently.
                                                                               This optimism seemed quite legitimate. China’s gross
         crisis unfolding day-by-day.
                                                                            domestic product (GDP) growth rate reached a historical
         Ripples from Wall Street spread to                                 high at twelve percent last year. Who would believe such a
                                                                            huge, fast-growing economy, already boasting double-digit
         each corner of the global economy.                                 growth for five years and probably poised to become the
         When this financial tsunami finally                                locomotive of the world economy in the near future, would
                                                                            come to a sudden stop?
         hits China, should we expect the                                      Last year, there were already unnoticed cracks in the ice.
                                                                            China’s exports have grown annually by more than twenty
         earth to shake and a collapse of the
                                                                            percent since 2000. Exports have become an important
         Chinese economy?                                                   factor. Last year, almost a quarter of China’s GDP growth


                          | INDEPENDENT THINKING ON INTERNATIONAL AFFAIRS
                                                                              THEWORLDTODAY.ORG NOVEMBER 2008
                                                                                                                                                 
								
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