Enlightenment From Argentina Financial Crisis

At the end of 2001, Argentina, the third biggest country in Latin America, suffered a crisis in the areas of finance, economy, society and politics. At a time, Argentina had become the typical model outperformed in emerging market countries. However, this crisis caused Argentina's economy to collapse, shook the foundation of the society and government. In 1990's, the frequent financial crises had put the safety of developing countries' economy in danger, and had raised many challenges to developing countries regarding how they should steadily develop their finance and economy models.In China, reform and opening-up have yielded substantial results. The socialist market economy has taken shape initially. But there still many problems existed in the banking realm. For example its financial source is limited, its financial equipment is not fully developed, its financial organizations are not fully functional or efficient. The regulation system and laws and rules in China have not been adapted to the needs of the opening-up. Chinese people have very limited concepts and knowledge of financial crisis. They know little about the control and the prevention from financial crisis as well. The development of China's economy is going through many changes inside and outside the country and opening-up is getting deeper. The highly controlled manner, which protected China's economy, will not function anymore. The weaknesses of China's economic structure and financial system are being exposed as time goes by. Because of the coherence of the whole economy system, any small problem within the economy system could become the cause of a dangerous financial crisis.China is a large country with great amount of land and people. The economic and social responsibilities are very important and immediate. The purpose of this paper is to analyze the circumstances in China so that we can learn from the case of Argentina financial crisis in order to build a financialsafety wall before the crisis strikes, and reduce the possibility of getting a crisis. In the meantime, try to enforce the safety issue of finance and improve economy, try to balance safety of China's finance and the steadiness of our society.In the first place, beginning with the origin of Argentina crisis, the paper analyzes the hidden danger in economic development, social contradiction and political problems. Further more it explains the special style of this unprecedented complicated crisis, which displayed its seriousness step-by-step. Due to the far-reaching influence and grave consequence all the developing countries include China should pay more attention to it.In the second place, the paper analyzes the causes of Argentina crisis from neoliberalism economic structure, convertibility plan, foreign debt and passivity of the international economic environment. We should catch hold of the deep causes in Argentina crisis not only the problems on surface such as higher foreign debt, economic slowdown and more out-of-work laborer. Only aiming directly at the problems should we find the exact ways on how to solve them.At last but not the least, integrating with China's reality the paper analyzes whether there are financial risks or not in economic structure, foreign debt management, foreign exchange system selection and foreign exchange level. In face of the changes from domestic and outside circumstances, we should carry out the reform steadily, strengthen financial regulation, prevent and defuse financial risks so as to provide better banking services for economic development and social stability.