Asia Economy after the
    Financial crisis
     HUANG WEIPING (PhD)
         PROFESSOR
     SCHOOL OF ECONOMICS
  RENMIN ...
Dr. Doom
    • Prof. Nouriel.
      Roubini ,
    • Stern Business
      School
    • New York
      University
Growth rate in U.S,EU,China
Unemployment rate in
 U.S,EU,Japan,China
Causes
• Why is this the worst financial crisis since the Great
  Depression 1929-1933?
• Not:
• -Financial industry over-...
Causes
• Incomplete regulatory supervision for financial
  management
• Belief that Housing Prices would continue
  rising...
Imbalance in World Economy
• Allocation of resources into wealth
  production and income distribution fields
  should be i...
Imbalance in World Economy
• With globalization, unbalance allocation of
  resources in one economy, could be in a good
  ...
Imbalance in World Economy
• Less production but more consumption in
  developed, bowering consumption is not
  sustainabl...
Join Hands and Tide over
  Difficulties Together
Secure
• Establish credible macroeconomic policies
• Provide needed liquidity, Secure confidence of
  creditors/depositors...
G20 summit – leaders' statement
• We have today therefore pledged to do whatever is
  necessary to:
• restore confidence, ...
U.S. Economic Adjustments
• Need to reduce fiscal deficit and increase
  savings
  – Now happening too fast
• Need to bala...
U.S., EU, Japan
• U.S. offered $12.8 trillion to inject liquidity, and buy
  the toxic assets.
• The 27-member bloc Europe...
China’s contribution
• China has made utmost efforts to provide support
  and assistance to other countries and signed
  b...
Recovery in future
• With Continue coorporation,the “second-
  wave crisis”of the world financial system
  avoided.
• EU- ...
SUPPLY CHAIN AND
TRIANGULAR TRADE
  PATTERN OF WORLD
      ECONOMY
Smiling curve in 1970’s and 80’s
   America                         America
   Europe                          Europe
   J...
Chinan corridor
HK
Smiling curve in late 1990’s
   America                     America
   Europe                      Europe
   Japan




   ...
New Manufacturing   Old Manufacturing
Centre - China      Centre - Four Dragons
Trade Triangle in 1980’s
Trade Triangle Recently(2005)
Conclusions
An Trade Triangle emerges, where China
develops a sustained trade deficit with China
and a surplus with OECD e...
Consumption Decrease
• In 1980’s U.S.saving rate was 9%, in 1990’s
  was 5%, in 2001, was around 2%, and in 2005,
  was on...
Market in EAST ASIA


                  CAFTA

         AFTA
                        10+3


                EAFTA
SPA
•   S – Strategies
•   P – Positioning
•   A – Action
•   Tradition Model of production in
    Asia should be changed?
PRIMARY OBJECTIVE FOR
   REGIONAL COOPERATION
• TO SUSTAIN THE GROWTH AND
  DEVELOPMENT OF THE REGION FOR
  THE COMMON GOO...
OPTIONS FOR THE REGION
OPTION 1: ESTABLISH 3 “ ASEAN+1 ”S
 FTA FORMULA AND FINALLY MERGE IN ONE
 (EAFTA);
OPTION 2: NORTHE...
ASEAN +3
• Consists of 10 ASEAN countries, and
 China,Japan, and South Korea, started in the
 1st ASEM in 1996,and 1st 10+...
Q & A : DISCUSSION

         • THANKS,
         •   COMMENTS?
         •   DISCUSSION?
         •   SUGGESTION?
         •...
Sustainable Development
• Y = C + I + (X – M);
• “Sustainable development," which deals
  only with the balance between ec...
Global hr forum2009-huang weiping-asia economy after the financial crisis
Global hr forum2009-huang weiping-asia economy after the financial crisis
Global hr forum2009-huang weiping-asia economy after the financial crisis
Global hr forum2009-huang weiping-asia economy after the financial crisis
Global hr forum2009-huang weiping-asia economy after the financial crisis
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Transcript of "Global hr forum2009-huang weiping-asia economy after the financial crisis"

  1. 1. Asia Economy after the Financial crisis HUANG WEIPING (PhD) PROFESSOR SCHOOL OF ECONOMICS RENMIN UNIVERSITY OF CHINA wphuang@netchina.com.cn
  2. 2. Dr. Doom • Prof. Nouriel. Roubini , • Stern Business School • New York University
  3. 3. Growth rate in U.S,EU,China
  4. 4. Unemployment rate in U.S,EU,Japan,China
  5. 5. Causes • Why is this the worst financial crisis since the Great Depression 1929-1933? • Not: • -Financial industry over-incentives – Incomplete regulatory model for crisis management – Financial engineering – Bad risk-management models in Micro-way – Sub-prime mortgage credit losses – Inept prudential supervision – Moral hazard from deposit insurance & related –Insufficient capital (in the U.S.) or Basel 2
  6. 6. Causes • Incomplete regulatory supervision for financial management • Belief that Housing Prices would continue rising – Implies failed risk management – Implies weak underwriting standards • Levered financial institututions: 10-to-1 up to 30-to-1 – Took on large mortgage-related risks – Difficult to raise capital when losses occur – Contagion results from delevering • Global Housing Bubble – UK, Ireland, Spain, Australia – Italy, France, China
  7. 7. Imbalance in World Economy • Allocation of resources into wealth production and income distribution fields should be in proper ratio in an economy. • In fact, it is unbalanced allocation: too much into financial industry in developed economies, which made supply was over demand in the domestic financial industry , bubble the prices of speculating assets, but lower and lower the return of the field. • Less production, more distribution?
  8. 8. Imbalance in World Economy • With globalization, unbalance allocation of resources in one economy, could be in a good ratio in the world. • NICs in production as China, developed in distribution by the strong financial services. • Then, over-production in NICs, over consumption in developed economies. • Two imbalances meet, vulnerable balance established in world economy.
  9. 9. Imbalance in World Economy • Less production but more consumption in developed, bowering consumption is not sustainable. Paper money is not real wealth unless accepted by the producers in world. • Income and return distribution in the world is unbalanced. Same investment requires same return, law of averages of return. Finally, crash of virtual economy to meet the need of the law in the world.
  10. 10. Join Hands and Tide over Difficulties Together
  11. 11. Secure • Establish credible macroeconomic policies • Provide needed liquidity, Secure confidence of creditors/depositors • Protect depositors • government ownership of banks • Sale of assets taken over • Announce medium-term restructuring program • Overhaul of regulations to not repeat mistakes
  12. 12. G20 summit – leaders' statement • We have today therefore pledged to do whatever is necessary to: • restore confidence, growth, and jobs; repair the financial system to restore lending; strengthen financial regulation to rebuild trust; fund and reform our international financial institutions to overcome this crisis and prevent future ones; promote global trade and investment and reject protectionism, to underpin prosperity; and build an inclusive, green, and sustainable recovery.By acting together to fulfil these pledges we will bring the world economy out of recession and prevent a crisis like this from recurring in the future.
  13. 13. U.S. Economic Adjustments • Need to reduce fiscal deficit and increase savings – Now happening too fast • Need to balance trade deficits – Strong dollar may help short run, hurt long run • Strong consumers are key to recovery – Well-capitalized home buyers
  14. 14. U.S., EU, Japan • U.S. offered $12.8 trillion to inject liquidity, and buy the toxic assets. • The 27-member bloc European Union member states have injected a total of 3 trillion euros in fighting against the financial crisis. • Japan said it plans to spend at least $100 billion (67.2 billion pounds) more to help steer its economy. • Summit: An additional $1.1 trillion programme of support to restore credit, growth and jobs in the world economy.
  15. 15. China’s contribution • China has made utmost efforts to provide support and assistance to other countries and signed bilateral currency swap agreements worth RMB650 billion with relevant countries and regions,$40 billion to IMF. We have actively participated in the Self-managed Reserve Pooling Arrangement of the Chiang Mai Initiative Multilateralization scheme in an effort to uphold economic and financial stability in our region and promote regional financial cooperation and trade.
  16. 16. Recovery in future • With Continue coorporation,the “second- wave crisis”of the world financial system avoided. • EU- L shape, US – U shape, China- V shape, • U shape crisis would be lasted for the next 2-3 years, and full recovery happens in the process of adjustment of the world economy structure and trade pattern.
  17. 17. SUPPLY CHAIN AND TRIANGULAR TRADE PATTERN OF WORLD ECONOMY
  18. 18. Smiling curve in 1970’s and 80’s America America Europe Europe Japan Taiwan, HK Korean, Singapore
  19. 19. Chinan corridor HK
  20. 20. Smiling curve in late 1990’s America America Europe Europe Japan China
  21. 21. New Manufacturing Old Manufacturing Centre - China Centre - Four Dragons
  22. 22. Trade Triangle in 1980’s
  23. 23. Trade Triangle Recently(2005)
  24. 24. Conclusions An Trade Triangle emerges, where China develops a sustained trade deficit with China and a surplus with OECD economies of nearly equal magnitude. In other words, most of China’s trade surplus will ultimately accrue to its regional neighbors. This has profound implications for patterns of both North-South and regional capital accumulation.
  25. 25. Consumption Decrease • In 1980’s U.S.saving rate was 9%, in 1990’s was 5%, in 2001, was around 2%, and in 2005, was only 0.5%. With financial crisis, the saving rate increased 2.4%, in August it was 6.9%, if national saving rate increased 5% points averagely in 2009, that means consumption decrease at least USD 700 billion.
  26. 26. Market in EAST ASIA CAFTA AFTA 10+3 EAFTA
  27. 27. SPA • S – Strategies • P – Positioning • A – Action • Tradition Model of production in Asia should be changed?
  28. 28. PRIMARY OBJECTIVE FOR REGIONAL COOPERATION • TO SUSTAIN THE GROWTH AND DEVELOPMENT OF THE REGION FOR THE COMMON GOOD OF ITS PEOPLES AND, IN THIS WAY, TO CONTRIBUTE TO THE GROWTH AND DEVELOPMENT OF THE WORLD ECONOMY
  29. 29. OPTIONS FOR THE REGION OPTION 1: ESTABLISH 3 “ ASEAN+1 ”S FTA FORMULA AND FINALLY MERGE IN ONE (EAFTA); OPTION 2: NORTHEAST ECONOMIES ESTABLISH FTA, THEN INTEGRATE INTO AFTA; OPTION 3: LAUCH EAFTA IN EARLY STAGE; WHY NOT 10+5?
  30. 30. ASEAN +3 • Consists of 10 ASEAN countries, and China,Japan, and South Korea, started in the 1st ASEM in 1996,and 1st 10+3 summit in Kula Lumpur in Dec. 1997. • Objective: to provide the natural basis for a comprehensive East Asia Trade Cooperation
  31. 31. Q & A : DISCUSSION • THANKS, • COMMENTS? • DISCUSSION? • SUGGESTION? • AND ...?
  32. 32. Sustainable Development • Y = C + I + (X – M); • “Sustainable development," which deals only with the balance between economic development, social development and environmental conservation. Sustainable development is a functional approach with an emphasis on intergenerational justice

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