Impact of the Global Financial Crisis on China: Empirical Evidence and Policy Implications

<正> This paper applies a structural vector autoregression analysis to quantify the impact of theglobal financial crisis on China. It is found that the impact is indeed sizeable: a 1-percentdecline in economic growth in the USA, the EU and Japan is likely to lead to a 0.73-percentdecline in growth in China. The article discusses whether the current measures of fiscalstimulus are adequate to offset the sharp decline in external demand. Although there is littledoubt that the massive fiscal stimulus will largely offset the significant shortfalls in externaldemand, the current growth pattern in China will be increasingly unsustainable in the longterm. China's reform cycles suggest that external shocks are often opportunities for structuralreforms. Therefore, the crisis could also be a catalyst for rebalancing China's economicstructure so as to return the economy to a sustainable path.