Managing Financial Crisis: A Critical Review of China’s Policy

The study examined the financial crisis and their impact on world economies, particularly China. The study compares the Southeast Asian financial crisis and the recent US based crisis of subordinated debt conduction in Chinese context. Then, it analyzed the impact of financial crisis in three areas: economic growth potential, social conflicts and respond to risks. Conclusions were made on the basis of data and literature discussed. Policy recommendations have been forwarded for the Chinese government as well as other developing economies for policy adjustments in three areas. Namely, stable economic growth needed to expand domestic demand to compensate for the decline in current account surplus. At the same time, the direct use of radical fiscal stimulus measures to increase household income and consumer spending, reducing the potential social conflicts arise and monetary policy measures, especially the internationalization of Chinese Yuan to rapidly out of recession