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.
CONTEXT(Help)
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The Global Financial Crisis »The Global Financial Crisis
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Long-term causes of the financial crisis? »Long-term causes of the financial crisis?
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Unintended consequences of earlier public policy choices »Unintended consequences of earlier public policy choices
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US spending funded by credit »US spending funded by credit
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People encouraged to live beyond their means »People encouraged to live beyond their means
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Cost of borrowing low »Cost of borrowing low
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Asian investment in US treasuries »Asian investment in US treasuries
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Positive feedback loop with US buying Asian-produced imports »Positive feedback loop with US buying Asian-produced imports
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Influx of Asian money into the US market »Influx of Asian money into the US market
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Growth of the Chinese economy »Growth of the Chinese economy
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China was saving nearly 50% of its GDP »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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