Submission Title

Popping China's Bubble: An explanation of the conflict between economic health and the Chinese Dream

Streaming Media

Presenter Information

Alexander Wolfe, Economics & International Security Studies, Center for International Relations.

Abstract

This purpose of this paper is to outline the institutional, financial, and cultural drivers that have led to extensive volatility in the Chinese financial system. China’s adoption of Keynesian stimulus during the 2008 financial crisis confirmed the Chinese Communist Party’s commitment to preserving economic growth at all costs. Liquidity crises in 2016 and 2018 illuminated public discontent with the government’s deleveraging efforts and push for a negative savings environment. National distaste for deleveraging has limited the political urgency of deleveraging, and the bureaucratic institutional culture is unlikely to yield public officials willing or able to forcefully act. This paper analyzes the economy created in the aftermath of unprecedented growth, investigating the cultural orientation toward stability, execution of fiscal policy and prevalence of systemic risk.

School

McAnulty College and Graduate School of Liberal Arts

Advisor

Matt Ryan

Submission Type

Video

Publication Date

January 2020

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Jan 1st, 12:00 AM

Popping China's Bubble: An explanation of the conflict between economic health and the Chinese Dream

This purpose of this paper is to outline the institutional, financial, and cultural drivers that have led to extensive volatility in the Chinese financial system. China’s adoption of Keynesian stimulus during the 2008 financial crisis confirmed the Chinese Communist Party’s commitment to preserving economic growth at all costs. Liquidity crises in 2016 and 2018 illuminated public discontent with the government’s deleveraging efforts and push for a negative savings environment. National distaste for deleveraging has limited the political urgency of deleveraging, and the bureaucratic institutional culture is unlikely to yield public officials willing or able to forcefully act. This paper analyzes the economy created in the aftermath of unprecedented growth, investigating the cultural orientation toward stability, execution of fiscal policy and prevalence of systemic risk.