The 2008 Global Financial Crisis began to impact China in late 2008. Because China’s economy is heavily dependent on trade and investment inflows, the fall in global demand naturally led to a severe slowdown in growth. The first quarter of 2009 saw a GDP growth rate of 6.1%, the lowest growth rate China had experienced in ten years.
Once the severity of the crisis became clear, the Central Government responded swiftly with a wide variety of measures aimed at stimulating the economy, mainly with the focus of increasing GDP growth to at least 8%. Because the crisis also exposed key structural imbalances within the economy, i.e., overdependence on trade, measures were also aimed at correcting these imbalances.
This paper seeks to analyze the Chinese Government’s responses to the 2008 Financial Crisis, determine the effectiveness of the responses, and give a comprehensive evaluation. This paper also explores the opportunities and challenges facing the Central Government as it continues to address key structural imbalances within the economy exposed by the crisis.