China and the Mortgaging of America: Economic Interdependence and Domestic Politics (International Political Economy Series)

China and the Mortgaging of America: Economic Interdependence and Domestic Politics (International Political Economy Series)

Helen Thompson

Language: English

Pages: 186


Format: PDF / Kindle (mobi) / ePub

In 2008, the economic relationship between the United States and China almost collapsed due to a crisis at two American mortgage corporations, Fannie Mae and Freddie Mac. This book explains how that crisis came about, and analyzes the consequences and implications.




















led to 38 China and the Mortgaging of America two significant changes. Domestically, the Chinese government restructured the economy, most notably opening up the state-owned enterprises to foreign governance strictures and liberalising labour law. Externally, it accepted what the Clinton administration was demanding in a bilateral trade settlement as a prelude to WTO membership. Compared to China’s previous negotiating stance, the 1999 bilateral agreement represented a capitulation to the

Association of South East Asian Nations China Investment Corporation Chiang Mai Initiative Community Reinvestment Act European Union Foreign Direct Investment Federal Housing Administration Federal Housing Finance Agency General Agreement on Tariffs and Trade Gross Domestic Product Government Sponsored Enterprise Home Owners’ Loan Corporation International Monetary Fund No Income, No Assets Organization for Economic Cooperation and Development Office of Federal Housing Enterprise Oversight

GOVERNANCE Crisis, Institutions and Political Economy Dominic Kelly and Wyn Grant (editors) THE POLITICS OF INTERNATIONAL TRADE IN THE 21ST CENTURY Actors, Issues and Regional Dynamics Sandra J. MacLean, Sherri A. Brown and Pieter Fourie (editors) HEALTH FOR SOME The Political Economy of Global Health Governance Craig N. Murphy (editor) EGALITARIAN POLITICS IN THE AGE OF GLOBALIZATION John Nauright and Kimberly S. Schimmel (editors) THE POLITICAL ECONOMY OF SPORT Morten Ougaard THE GLOBALIZATION

political battle that ensued, Born resigned. In November 1999, the Treasury and Greenspan recommended that Congress permanently exclude the Commission from any regulatory authority over derivatives.38 As his administration was coming to an end in December 2000, President Clinton signed into law the Commodity Futures Modernisation Act, which ensured that products offered by banking institutions would not be regulated as futures contracts and hence would not fall under the Commission’s legal remit.

formation of the CIC six months later. The Chinese leadership had turned to a sovereign wealth fund to try to reduce exchange rate losses, but, once circumstances changed, it found itself confronting the likelihood of a direct loss on the first corporate investment that the CIC held, regardless of what happened to the value of the dollar against the yuan. The size of the losses of the large American financial corporations in the second half of 2007 then created a whole new and intractable

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