IMPACT OF THE GLOBAL FINANCIAL CRISIS 2007-08 ON THE US AND CHINA: IMPLICATIONS FOR GLOBAL POLITICS

This article analyzes the differential impact of the 2007-08 global financial crisis on the United States and China, and explores the profound implications of this for global politics. It examines how the crisis, which originated in the US, severely damaged the American economy and undermined its model of financial capitalism. The study then contrasts this with the experience of China, which, thanks to its massive stimulus package and state-controlled financial system, was able to weather the crisis relatively well and emerged as a key engine of global growth. The research argues that the crisis did not just have economic consequences but also led to a significant shift in the global balance of power. The paper posits that the crisis accelerated the relative decline of the US and the relative rise of China, giving a powerful boost to the narrative of a shift in global power from the West to the East. The analysis concludes by assessing the long-term implications of this power shift for the future of global governance and the nature of the US-China relationship.

The global financial crisis of 2007-08 was a watershed event that not only triggered the worst global recession since the 1930s but also accelerated a major shift in the global balance of power. This paper provides a comparative analysis of the crisis's impact on the world's two largest economies, the United States and China. The first part of the study details the devastating impact of the crisis on the US. It analyzes the collapse of its housing market, the failure of major financial institutions, and the subsequent "Great Recession," which led to a massive loss of wealth and a surge in unemployment. The paper argues that the crisis dealt a severe blow to the prestige and credibility of the American model of free-market capitalism. The second part of the paper provides a contrasting analysis of China's experience. It details how China's massive state-led stimulus program enabled it to maintain a high rate of economic growth, effectively acting as a locomotive for the global recovery. The core of the article is an analysis of the geopolitical implications of this differential impact. It argues that the crisis significantly enhanced China's international stature and confidence, while diminishing that of the United States. The paper discusses how this has translated into a more assertive Chinese foreign policy and a growing debate about the decline of American hegemony. The findings suggest that the global financial crisis was a pivotal moment, marking the symbolic end of the post-Cold War "unipolar moment" and the definitive arrival of a more multipolar world, with the US-China relationship at its center.