The paper 'Asia Pacific Business and Policy Response to the Global Economic Crisis' is a wonderful example of a Business Case Study. The financial crisis is an economic occurrence that can be ranked second after the great depression. Just like the great depression, the financial crisis has brought about various implications in many nations of the world. The concept of the financial crisis is widely associated with various contexts in which certain assets or financial institutions experience an unexpected loss in a huge portion of their value (Nanto, p6).
Although the financial crisis has been argued as an occurrence that is not very regular, the Asian Pacific region is one of the regions of the world that has experienced the financial crisis in various episodes. In the 20th and the 21st century the Asian pacific region experienced the Asian Financial Crisis of 1997 and the recent global financial crisis. This particular paper seeks to analyze the experience of two countries; Japan and China in terms of the way in which they were affected by and confronted the two financial crises. The Asian Financial Crisis of 1997 When evaluating the manner in which Japan and China were affected by the Asian Financial Crisis of 1997 various similar aspects can be noted from the two countries.
One of the common impacts was the decline in currency against the dollar. Kwan (p6) highlights that the Asian Financial Crisis began as a currency crisis in Thailand in 1997. The decline of Thai currency (Baht) brought about adverse repercussions on currencies of other neighboring countries and Japan and China were also not excluded, based on the fact that the two countries had created strong ties with other Asian countries through investment and trade.
The crisis happened at a period when the economy of Japan was deep into a recession essentially after Japan’ s participation in the Second World War. Consequently, the Japanese yen continued to fall more due to the implications of the crisis. China on the other hand had a sound economic condition however based on the fact that it was involved in trade and investment with other Asian countries, she also did experience a slight decline in currency in relation to the dollar. Another similar implication of the Asian Financial Crisis of 1997 on both China and Japan was the decline in the demand for exports of both countries.
Pont et al (p3) highlight that Japan was a major trading partner to other Asian Pacific countries, for instance in 1996 more than 40% of exports from Japan were directed to other Asian countries. However with the emergence of the crisis, the demand for Japanese exports declined by 4.7% in 1998. The decline of demand was due to the financial strains that other Asian countries were also experiencing as a result of the effects of the crisis.
The implication of the reduced demand for Japanese exports is that -manufactures begun to produce less, in addition the level of investment in sectors such as construction reduced. China also experienced a reduction in the demand for its exports. Hai and Zhong(p, 4) reveal that the impact of the crisis on Chinese exports was influenced by two key factors. One of the factors was as a result of the currency depreciation of other Asian countries which made Chinese services and goods to be expensive thus lowering the level of demand for the goods/services.
The second aspect was due to the fact that there was a relative increase in import prices therefore consumers in other countries switched to substitute goods instead of buying goods that were from China.
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