Chinese economy in the aftermath of the global financial crisis : challenges to macroeconomic rebalancing

When the global financial crisis erupted in the United States in the fall of 2008, the Chinese economy was seen to be relatively immune. However, this optimism proved misplaced. The contagion quickly spread to China, albeit, the overall impact was moderate - at least when compared to many other advanced and emerging market economies. How and why was China impacted by the financial crisis? In particular, what were the "transmission channels" via which the contagion spread into the Chinese economy? How has Beijing responded to the economic and sociopolitical challenges unleashed by the crisis, and how effective have been their responses been? Furthermore, what must Beijing do over the long-term to rebalance its economy and make it less vulnerable to domestic and external shocks? This paper addresses these interrelated issues.