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Inner Workings of the Chinese Economy

36 Pages Posted: 21 Mar 2016  

Winston W. Chang

State University of New York at Buffalo - Department of Economics

Date Written: March 17, 2016

Abstract

The recent economic downturn in China has severely impacted the global economy. Chinese GDP growth has slowed sharply; corporate-debt ratios are unprecedentedly high; the equity markets are exceptionally volatile; the renminbi has depreciated and capital flight has drained China's forex reserves at an alarming rate. This paper investigates the root causes of all these events and shows the complexities and difficulties, such as the thorny trilemma (impossible trinity) problem, faced by the policymakers in their attempt to fix these problems. The paper then discusses some feasible policies Chinese officials can consider in dealing with the current situations and some structural reforms to steer away from these problems.

Keywords: China's economy; yuan devaluation; capital flight; forex reserves; impossible trinity; SOEs.

JEL Classification: E50, E61, F32, F34, O53

Suggested Citation

Chang, Winston W., Inner Workings of the Chinese Economy (March 17, 2016). Available at SSRN: https://ssrn.com/abstract=2752030

Winston W. Chang (Contact Author)

State University of New York at Buffalo - Department of Economics ( email )

453 Fronczak Hall
Department of Economics, SUNY at Buffalo
Buffalo, NY 14260
United States
716-645-8671 (Phone)
716-645-2127 (Fax)

HOME PAGE: http://economics.buffalo.edu/facultyprofiles/winston-chang/

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