The Subprime Impact on China

Chi Lo
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Chi Lo: Economic Strategist

Chapter 3 in Asia and the Subprime Crisis, 2009, pp 25-38 from Palgrave Macmillan

Abstract: Abstract The damaging financial effect of the subprime crisis on China and its banking system is limited: less than 1% of total assets in the system, according to the market estimation. Even the deepening of the crisis after US investment bank Lehman Brothers went broke in September 2008 did not inflict further damage on Chinese banks because they had been cutting foreign risk exposure way before the crisis. This limited impact was a result of government ownership, strict regulations and a closed capital account that have all added up to shield the Chinese financial system from the external shock. Hence, there was no confidence crisis and no counterparty risk in the Chinese banking system.

Keywords: Total Asset; Real Effective Exchange Rate; Export Diversification; Chinese Bank; Counterparty Risk (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-25113-7_4

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DOI: 10.1057/9780230251137_4

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