China's Response to the Global Financial Crisis: Examining the Incentives Behind China's Stimulus Package
Abstract
This thesis examines the incentives behind Chinas decision to implement its aggressive $585 billion economic stimulus package in response to the global financial crisis, or GFC. The thesis assesses the explanatory power of economic, social, and political causal factors to explain Chinas decision. The main finding of this thesis combines all three factors to demonstrate that Chinas stimulus package was most likely implemented because the Chinese Communist Party (CCP) perceived that it was necessary to protect its regime. The economic argument demonstrates how Chinas government had to resort to an investment-led stimulus plan to generate economic growth through domestic demand after the GFC severely damaged Chinas export sector. The social argument establishes how tens of millions of people left unemployed by the GFC felt marginalized by the government due to the countrys inequitable economic growth, which was perceived to have primarily benefitted the regime. This increased the potential for social instability, which would have been directed at the CCP. Lastly, the political argument determines how the regime was under significant political pressure to meet domestic and international expectations to sustain economic growth throughout the GFC. These findings underscore how the CCP prioritizes regime survival over long-term economic development.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jun 01, 2018
- Accession Number
- AD1059910
Entities
People
- Clement W. Herron
Organizations
- Naval Postgraduate School