Intermediate Macro Writing - Assignment Example

This inefficiency and nuisance led to the plunge of several countries who had invested in financial institutions in the U.S, drowning their market commodities and share values and disrupting the entire stock and trade market with a series of sequential bailouts, buyouts, and collapses. (Havemann, The Financial Crisis of 2008, 2015) Of the most affected from this crisis emergence was China, with the most foreign exchange reserves held than required to withstand shocks. However it was found that countries that had accumulated large reserve assets before the crisis, such as China, are more likely to recover GDP growth after such global financial dilemmas.

(Dominguez, Global Financial Crisis, 2011) Here we shall investigate to see the cause and effects of this incident in China. China is famously seen as the engine of the world economy, emerging as (once a major contestant), now a renowned leading exporter and generous importer in the past two decades, with its GDP increasing from 1.7-9.5%, a high purchasing power parity (PPP) after market exchange valuation and trade ratios doubling every 4-5 years. Its commodities have the power to lower consumer prices hence having a great impact on prices of goods and services internationally, with exports share raised from 3-10% and worth approximately $1.

5 trillion. Chinas super competitiveness has been achieved by its universal trade and business activities that led to its popularity, holding 20% demand of world platinum and 17% pallid. High rank and prosperity was experienced until the downfall of the financial crisis had dawned upon their hard work and achievement. With trillions of dollars worth investment in foreign reserves, accelerating trade surpluses and a two-digit growth rate in the initial months of 2008, China came under the tidal wave of the financial crisis by mid year as banks began