China's Challenge: Opening the Economy

The video discusses China's economic challenges, focusing on the need for convertibility and capital market development. It highlights lessons from past financial crises, emphasizing the importance of reducing dependency on foreign demand. The discussion covers China's economic reforms aimed at increasing domestic demand and addressing income distribution. The video also explores the challenges posed by a producer-biased economy and vested interests, particularly among state-owned firms. Finally, it outlines strategies for economic growth, including making financial markets more competitive and improving investment productivity.

What lesson did China learn from the 1998 Asian financial crisis?

• To allow foreign finance to enter freely

• To devalue their currency

• To depend more on foreign demand

• To build a surplus and control foreign finance

What is a key strategy for China to reduce dependency on foreign demand?

• Increasing exports

• Expanding domestic demand

• Decreasing household income

• Raising taxes on imports

Why is it important for China to have a more competitive financial sector?

• To increase foreign investment

• To provide better interest rates to savers

• To reduce government control

• To lower taxes

What is a major challenge in changing China's economic strategy?

• Lack of natural resources

• High levels of foreign debt

• Strong vested interests in state-owned firms

• Low levels of technology

What needs to be improved to boost domestic demand in China?

• Export tariffs

• Household income distribution

• Foreign investment policies

• Military spending