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
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Long-term causes of the financial crisis? Â»Long-term causes of the financial crisis?
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Unintended consequences of earlier public policy choices Â»Unintended consequences of earlier public policy choices
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US spending funded by credit Â»US spending funded by credit
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People encouraged to live beyond their means Â»People encouraged to live beyond their means
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Cost of borrowing low Â»Cost of borrowing low
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Asian investment in US treasuries Â»Asian investment in US treasuries
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Positive feedback loop with US buying Asian-produced imports Â»Positive feedback loop with US buying Asian-produced imports
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Influx of Asian money into the US market Â»Influx of Asian money into the US market
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Growth of the Chinese economy Â»Growth of the Chinese economy
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China was saving nearly 50% of its GDP Â»China was saving nearly 50% of its GDP
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China did not encourage higher domestic spending soon enough
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