What made 2011 a mercurial year and what should be done to avoid such situation in the future? – Part 3
Tuesday, January 3rd, 2012 4:00:10 by Usman Khalid
More aching is the failing economy of China. During the 2008 episode, the Chinese government issue a $630 Billion easing package to the business sector, like the US, but the industry managed to get out of the crisis, unlike the US. However, the issue that
remained un addressed was the encouragement of domestic consumption.
The Chinese government failed to foresee any crisis that might strike in the world again and focused on increasing the exports. They succeeded in keeping the second most powerful economy flowing through the calamity by investing on the domestic production
infrastructure, however; the increase in exports proved to be another short-term solution on the board.
Now with the lowest global demands in Chinese history, the country is stuck with low exports, hence an avalanche that is nearing the corporate sector every day. The financial regulatory authorities in China failed to encourage the domestic consumption with
the fear of expensive exports in the long run. There viewpoint of increasing the internal purchasing was to up the wage rate, which would eventually strike a blow on the cheap production in the country and eventually an expensive export and high currency rate.
China is now in the quandary of less exports and even lesser domestic consumption.
However, there is always a U-turn from every ordeal and best and nearest is in the long run. The global economists need to think in longer sights. They need to come up with financial tools, unlike CDSs, that might bring slow appreciation in stability but
it will be beneficial in the long run.
Sweden formulated a fiscal council after the financial crisis in the 90s. With that department created, every company in the country was in the black and white and there were strict rules with which the industrial sector was run. This leads to another bitter
but fruitful solution.
Short URL: https://www.newspakistan.pk/?p=8071
Posted by Usman Khalid
on Jan 3 2012. Filed under Business.
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