The Euro Zone Sovereign Debt Crisis And Its Implications For China

Amid all the counties in the world are recovering from the impact of financial crisis, Greek, in2009, declaimed that the government’s fiscal deficit and debts exceed the limited ruled by the European Union. With things getting worse, the sovereign debt crisis broken out. In the following year, Ireland, Portugal, Italy and Spain, the four countries’fiscal situation also became dangerous, facing the risk of sovereign debt default. As the crisis was developing further, the core counties such as Germany and France, their fiscal situation was not positive and faced big challenges. The euro zone’s debt crisis has brought far-reaching impact on both EU and the world’s economy.After outbreak of the crisis, the EU and international organizations have taken varieties measures for example providing loans to the countries in crisis and decreasing banks’debt to tackle the crisis. The EU also built up some institute for instance European Stability Mechanism and Eurobond. The crisis has a big influence on EU’s development regarding EU’s economy recovery progress, European integration course as well as Euro’s international position. This paper analyzed the causes and impact of this crisis, which is very meaningful to help EU deal with the crisis and improve European integration. To China, this crisis made us reflect about how to change the economy’s development module, to draft up the economic policies and to realize sustainable development.After reading many articles, this paper described the reasons of the crisis from internal and external aspects by using qualitative way. The internal aspects included the unbalance economic structure of countries in crisis, the defect of euro zone’s system and mismatch polices and so on. The external mainly referred to the international financial crisis and the labor force globalization. Secondly, this paper explained the crisis impacts on EU and China. For EU, the major influence is on EU’s economy and European’s integration; for China, the major influence is on China’s export, EU’s trade policy to China and RMB’s international status. Finally, based on the analysis of the crisis reasons and impacts, the paper gives some suggestions on China’s development such as the local debts management, balance between macroeconomic and stability of economy and also the area-currency integration corporation.In writer’s opinion, although the reasons of the crisis have internal and external perspectives, however, the internal reasons that the unbalance and contradiction of the economic structure are the most fundamental, In other words, even without the impact of the financial crisis, the economy of the countries in crisis cannot be sustainable. When analysis the revelation of the crisis to China, the writer has considered the hot issues for example the inflation problem and real estate and come to the conclusion that China need stable economy policy. Due to the limited of knowledge and the lack of finance, this paper has not explained measures and its effect which the EU has taken to solve the problem.