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1、The U.S. sub-prime mortgage financial crisis on Chinas Economy Abstract: The U.S. sub-prime mortgage crisis in order to sub-prime mortgage crisis as a starting point and quickly spread to the United States finance, stock market, real estate market as well as the entire U.S. economy, and as the globa
2、l economy to further expand the chain throughout the world, and then evolved into a global economic crisis. Based on the United States at the core of the world economy and Chinas economy, industry, finance, foreign exchange particularity, the Chinese government must be more integrated economic chara
3、cteristics of its own, adopt a positive and rational policy responses to the U.S. subprime mortgage financial crisis on the negative impact of Chinas economy . Key words: sub-prime mortgage crisis; rescue policies; to expand domestic demand First, the U.S. sub-prime mortgage crisis Overview The U.S.
4、 sub-prime mortgage crisis is the beginning of 2007 took place in the United States subprime mortgage crisis as a starting point and quickly spread to the U.S. financial and real estate market as well as the entire U.S. economy, and further extend the chain as the global economy around the world, th
5、e global economic crisis. The U.S. sub-prime crisis, saying that over the past year in the United States by the real estate bubble caused by the bankruptcy of subprime lenders bankruptcy, a large number of investment banks, funds and other financial institutions or even forced to close loss-making,
6、economic growth, recession and turbulent stock market financial crisis . In the United States. Mortgage loan market, according to the level of the borrowers credit loan market is divided into optimal (Prime Market), subprime loan market (subpfimeMarket), and ultra-A loan market (ALT-A). High-quality
7、 loan market for a high credit rating (credit score of 660 points or above), subprime loan market refers to credit scores below 620 points, proof of income, loss, indebtedness, the debt ratio of their income (DTI) is higher than 55% and the loan to value ratio (LTV) 85% or more, ALT-A loan market in
8、 between. House prices continued to rise in the circumstances, the sub-prime mortgage financing to lenders, providing a continuous flow of funds, and mortgage lending company will be sold to commercial banks or investment banks, the banks and then repackage as mortgage loans Bonds were sold to indiv
9、iduals or institutional investors to transfer risk. This asset securitization way that many people share the proceeds of the property value. However, the U.S. house prices overheating, the Federal Reserve raising interest rates 17 consecutive times, the benchmark interest rate from 1% to 5.25%. As i
10、nterest rates rise, housing and borrowing costs rise, the country house prices dropped by 20%; the same time, rising oil prices, and prices rose, residents increased expenditure, the total number of housing mortgage holders found more than value of the house, they have no choice, can only be default
11、ed loans. In the absence of property rights, and then limited financing channels, the results of sub-prime mortgage default rates rise sharply, especially in variable rate mortgage loan default rate is high. Meanwhile, the United States a variety of financial derivatives on the sub-prime crisis has
12、fueled the role of sub-prime loans and their derivatives to reduce transaction costs and increase the difficulty of risk management, many transactions have been impossible a reality. April 2, 2007, the United Statess second-largest subprime lender New Century Financial Corporation declared bankruptc
13、y, marking the largest U.S. sub-prime mortgage crisis broke out, as of October 2008, all United States have numerous sub-prime mortgage lenders announced closure of bankruptcy. Followed by a group of investment banks because it involves the collapse of subprime mortgages, but a large number of sub-d
14、ebt credit rating cut, a large number of companies and funds were forced to suspend debt issuance. European financial markets following a serious concussion, September 7, 2008, the Federal Housing Finance Authority will come forward to take over Fannie Mae and Freddie Mac; shortly after the third-la
15、rgest U.S. investment bank Lehman Brothers, the largest in the history of banks for the United States for bankruptcy protection, the debt of more than 613 billion U.S. dollars, the United States as the financial crisis like the tsunami, the impact of the worlds financial markets and national economi
16、es, resulting in global economic downturn and national economic crisis. Second, the U.S. financial crisis on the impact of Chinas economy The acceleration of world economic integration process, so that Chinas economic development by the world economic environment growing, the growing influence throu
17、gh trade, finance and delivery channels such as international capital flows to China. As early as the initial crisis, Wall Street analysts have predicted, the sub-prime crisis, the loss may be 55 billion to 1100 billion. In January 2008, Soros proclaimed that the world is facing the most serious sin
18、ce World War II financial crisis, the U.S. sub-prime mortgage financial crisis, the impact on China deepened with time: From the direct perspective: the sub-prime crisis has created investment in Chinas foreign exchange loss of more than 150 billion. SONG soldiers, according to financial experts is
19、expected to: the United States subprime mortgage crisis is only a detonator. Behind the 48 trillion U.S. dollars in total debt and 45 trillion dollar fiscal deficit would be truly a giant powder keg. U.S. Federal Reserve and the European Bank of Japans massive injection of liquidity together sex, on
20、ly emergency but not alleviate poverty. Not long ago, the third-largest U.S. investment bank Lehman Brothers filed for bankruptcy, the U.S. investment bank collapsed three top-five, thus see that the United States, the so-called bailout, in fact, secured by U.S. Treasury bonds, once the debt problem
21、, in China in recent two one trillion U.S. dollars is necessary to melt into thin air. Look at the situation from Chinas foreign exchange reserves: Chinas foreign exchange reserve reached 1.8 trillion dollars, is the worlds foreign exchange reserves than any other country, and these foreign exchange
22、 reserves, the vast majority of U.S. dollar assets held in the manner. High-rise and fall of the U.S. economy or the impact on Chinas economy is very serious, the domestic parent company, took place insufficient funds, foreign companies will return to Lord, in China hundreds of billions of dollars h
23、ot money flight, will inevitably lead to a substantial devaluation of the RMB, and capital withdrawal Chinas stock market will rise out of the crisis, the property market crisis. From Chinas dependence on foreign trade perspective: China is now 65% dependence on foreign trade, export dependence has
24、more than 35%, while Japan and the United States in the peak year of the level of foreign economic development, dependence on foreign trade and no more than 25%, export dependence No more than 15%. China, as unprecedented in todays world of globalization of the external dependencies economy, the dev
25、elopment of the domestic economy by the global economic impact of more pronounced. From the perspective of Chinese enterprises. Chinas world factory built on top of Americas huge consumer market, the U.S. economy directly affect the trend in sales of Chinese products, the U.S. sub-prime mortgage fin
26、ancial crisis deepened, China will inevitably place a large number of corporate bankruptcies and massive unemployment. Statistics show that profit growth from the perspective of domestic industrial enterprises above designated size in 2007 full year profit growth was 36.7% in the first half is 43%,
27、while the first two months of 2008 was only 16.5%; U.S. corporate profits fell a percentage point Chinas growth in corporate profits dropped 10 percentage points. According to Asia Footwear Association in November 2008 statistics, and medium-sized shoe factories in Guangdong have closed more than 10
28、00. This scene lap enclosure affect the labor-intensive garment industry, there Pearl River Delta domino chain of bone collapse. View from the Commercial Bank of China, according to 2007, Securities Market Weekly reported that the Chinese mainland financial institutions ends in June 2006, a year, th
29、e investment the United States subordinated debt of up to 107.5 billion U.S. dollars, compared with the same period in 2005 grew by nearly one-fold means that Chinese investors in the subordinated debt market suffered heavy losses. According to the 2006 financial data for various commercial banks in
30、 China is estimated that a loss of about 3.85 billion Bank of China, Construction Bank, ICBC, Bank of China Merchants Bank and China CITIC Bank followed by a loss of 576 million yuan, 1.20 billion yuan, 252 million, 103 million yuan, 019 million yuan. Reposted elsewhere in the paper for free downloa
31、d http:/ Third, the Chinese government deal with the U.S. sub-prime mortgage financial crisis, the proposed An expansion of domestic demand, readjusting the industrial structure, and curb the development of the domestic economy slowing down. At present, the world economy are indications that the tre
32、nd of slowing world economic growth is difficult to avoid, as the worlds economic engine of the U.S. crisis will not only occur through financial channels, the market demand will be tight through the direct delivery to Chinas real economy. Chinas economic dependence on foreign trade as high as 60% o
33、f orders for Chinese enterprises mainly in European markets. Once this market problems, a significant reduction in orders, will directly affect the survival of export enterprises, the income of workers and domestic full employment. From Chinas current social point of view. Through the expansion of d
34、omestic demand, the need to address consumption growth sluggish, the key lies with the State to provide more public services, and deepen social reform, short-term rigorously enforce the tax cuts, reduce the operating costs of enterprises and stimulate the consumer sentiment; the mid-getting prices r
35、ight, so that price signals through the market the allocation of resources; the long-term improvement of the social security system, particularly in housing, medical care, pension and education reform. In short, on the one hand the existing fiscal revenue more inclined to public finance; the other h
36、and, to speed up the adjustment of taxation policy, the real wealth with the people, possession of wealth among the enterprises. 2 to deepen Chinas financial system innovation and improvement. Chinas financial institutions through reforms of recent years, especially after the restructuring and listi
37、ng of state-owned banks, domestic financial institutions in the capital adequacy ratio, governance structure, profitability, risk control capability has been greatly improved and so on, but that does not mean that China The financial system has improved. First, we must continue to strengthen financi
38、al innovation, expansion of intermediary business; continuously improve risk control and risk prevention capability, so that innovators with the banks own risk control and prevention capabilities to match; Secondly, we must continue to promote the universal banking, expand profitable channels, while
39、 the development of universal banking in the process. Focus on the risk of transmission in different business areas, focusing on building a different business venture between the firewall; another, and constantly improve the financial regulatory system, reduce regulatory blind. 3 to buy stake in U.S
40、. companies deepened bailout policies. With the depreciation of the dollar. Chinese holdings of U.S. Treasury bonds are likely to be negative real return, more seriously, the Chinese buy U.S. bonds, U.S. government bonds replaced with non-performing assets of financial institutions, the U.S. investo
41、rs taking advantage of the increased mobility of assets replacement investment in China, is tantamount Chinas high growth in the U.S. fixed-income assets and the asset swap. U.S. Treasury bonds are financial assets represent only a claim against the U.S. dollar, U.S. dollar because the United States
42、 holds the distribution rights, the U.S. dollar the currency symbol can be unlimited in fact manufactured. Based on this objective, the Chinese should be the reality of the current international financial deepening bailout policies, such as China not to buy U.S. Treasury bonds, but should encourage
43、the United States government to open up physical assets and rights restrictions on asset classes, such as Mobil, Microsoft, IBM, etc. fine texture of large companies and some financial stake in businesses, allowing the Chinese government or enterprises to purchase. In short, the U.S. sub-prime mortg
44、age financial crisis is a serious threat to the world and Chinas economic development, China and the United States should abandon the ideological differences to strengthen economic cooperation, the Chinese government also should the perspective of Sino-US economic ties, according to their national conditions , in stimulating domestic demand, based on the full play the role of the U.S. economic engine. Reposted elsewhere in the paper for free download http:/
