Impact of US Financial Crisis on China

By Jian Shuo Wang on 2008-10-04 20:47 · News

Several weeks after the US financial crisis really burst out. I tend to use Monday, Sept 15, 2008, the day Lehman Bros announcing bankruptcy, and Merrill Lynch’s sold out as my indicator of the big storm in US. I was luckily (or unluckily) in US at that time. At that time, almost everyone I talked with concerned about the crisis, and talked about the impact to them, to their firm, or to the country.

In China, there is no big tangible impact in daily life yet. The real estate price was impacted a little bit, but just from the real estate developer side. The newly built house price drops a little bit, but for second hand, there is no direct change yet (I mean the area I live in Shanghai). The increase of grocery and other daily goods are there for a long time already. Banks are still stable, and I don’t think people worry about any bankruptcy in China yet. In contrast, during my dinner with Microsoft friends, they were worried about their money in Washington Mutual Bank, which turned out to be valid concerns. In China, there is no such worry, YET.

I will continue to report about the reaction in China, from the daily life perspective.

6 Comments

The financial crisis is all the UK news will talk about and I can't help but feel that constant reporting of a lack of confidence in the global markets is adding to the lack of confidence.

People need to stop panicing and take deep breaths.

— Crazy Weight Loss · 2008-10-07 22:02

I think China's disaster will soon come. When it finally comes, it will be far more devastating than that in the US.

— CitySlick · 2008-10-08 09:43

I think China's disaster will soon come. When it finally comes, it will be far more devastating than that in the US.

— CitySlick · 2008-10-08 09:44

The DOW has certainly been taking big beatings in the recent past with more likely to follow. This meltdown is far from pretty. I think the Shanghai stock market has suffered enormously this year.

How has this affected my daily life? Answer: I have a lot of mixed feelings including disgust, angst, fear, worries and a general sense of not feeling very wealthy riding on a downhill roller coaster and feeling my house value drop.

I heard that Icelandic banks were previously very aggressive opening banks in Norway and promising depositors high interest rates. Now those poor Norwegians can't even get their money out.

— Shrek7 · 2008-10-10 00:36

I think the effect of US financial crisis have been felt and will be felt in China. I heard a large toy factory already faces bankrupcy.

As the US financial crisis hit the financial institutions, US consumers, who over-spent way too much in the past (from the ATM machine called home equity line of credit, and credit cards), will no longer be able to "shop until drop". China will not lend to the US as much as in the past, either.

Also European banks also face similar problems. Both US and Europe are big importers of China, when their economy slows, the Chinese economy (which relies heavily on exporting to EU and US), will get a hit too.

— STLPlace · 2008-10-19 22:15

I welcome a great depression in China with Communist Party crumbling and members killing each other through denouncements and finger pointing like in Cultural Revolution. All those factories will be abandoned and big cities will deserted with crumbling facades. Welcome to build and burst world!

— Wang Shao · 2009-02-12 18:07