China in the Period of Global Crisis: Beneficiary, Victim or Culprit?

This article analyzes new opportunities and challenges associated with Chinas entry into the world economy against the background of the recent crisis. It is shown that Chinas domestic macroeconomic disequilibria contributed heavily to the global disbalances which resulted in the global financial crisis. Extremely high rates of saving and investment, along with the huge trade surplus of China, are a mirror reflection of the US economic problems, such as negative gross saving rate, overdependence on consumer demand for economic growth, trade deficit and hefty inflows of foreign capital. Chinas economic cycle broke even in late 2007 - early 2008 that was aggravated with the recession in the developed countries. Hence Chinas economy met with unprecedented economic difficulties. Chinas government stabilization policy was up to the mark, and the economy has accelerated again. But deepening institutional reforms is essential for harmonic economic growth.