China did not encourage higher domestic spending soon enough
Failure by Chinese government to encourage higher domestic expenditure commensurate with the higher incomes sooner fuelled the global inbalance.
Immediately related elementsHow this works
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The Global Financial Crisis Â»The Global Financial Crisis
Long-term causes of the financial crisis? Â»Long-term causes of the financial crisis?
Unintended consequences of earlier public policy choices Â»Unintended consequences of earlier public policy choices
US spending funded by credit Â»US spending funded by credit
People encouraged to live beyond their means Â»People encouraged to live beyond their means
Cost of borrowing low Â»Cost of borrowing low
Asian investment in US treasuries Â»Asian investment in US treasuries
Positive feedback loop with US buying Asian-produced imports Â»Positive feedback loop with US buying Asian-produced imports
Influx of Asian money into the US market Â»Influx of Asian money into the US market
Growth of the Chinese economy Â»Growth of the Chinese economy
China was saving nearly 50% of its GDP Â»China was saving nearly 50% of its GDP
China did not encourage higher domestic spending soon enough
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