Fiscal Crisis

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Introduction………………………………………………………………2 1. The production of European Crisis and the current situation…………………….2 2. The causes of European Crisis……………………………………………………4 1. The external causes……………………………………………………………...4 2.1.1Government added leverage in the financial crisis made ​​debt burden……….4 2.1.2 Rating agencies to fan the flames boost contagion………………………….5 2.2 The internal causes………………………………………………………………5 3.The impacts on China’s trade policy…………………………………..6 3.1 European sovereign debt crisis led to the RMB was appreciated……………….6 3.2 Affect China's exports to European countries……………………………………7 3.3 With the RMB appreciation of non-US currencies, speculative capital inflows may increase…………………………………………………………………………..7 3.4 The shrink issue of foreign exchange reserves…………………………………..8 3.5 European debt crisis affect the process of global economic recovery…………...8 Conclusion……………………………………………………………….9 Reference……………………………………………………………….11

Introduction
Sovereign debt, it is point that sovereign state use the national reputation as a guarantee and through the issuance of bonds, and other methods to the international community have borrowed money. Because most sovereign debt in foreign currencies to international organizations, foreign government or international loans from financial institutions. Therefore, once the debt national credit rate was turn down, a sovereign debt crisis will be product. On December 11, 2009, the Greek government disclosed its public debt was as high as 300 billion euros. It was more serious than previously published. Affected by this, the three global credit rating agencies collectively cut Greece's sovereign credit rating. Thus light the fuse Europe sovereign debt crisis. With the eurozone sovereign debt crisis spreads, the eurozone country sovereign debt problem has already become the current global hot topic. The Greek as the leader of the "European countries" (PIIGS) sovereign debt crisis is spreading from the financial markets to the real economy. The market seems to smell in autumn 2008 lehman brothers bankruptcy of taste, and worries about the global economy will secondary exploratory bottom. European sovereign debt crisis is the deepening and development of financial crisis, the financial crisis is the direct cause. But European economies lack of productive, excessive dependence on vulnerable to financial crisis influence cyclical industry and the euro single currency system, the defect and so on, are the European sovereign debt crisis inner deep reasons. European sovereign debt crisis to the world and China's economy have had a profound impact. But in a certain extent also give us the enlightenment in the strengthening the government debt risk management and the foreign exchange reserves diversification aspects. In this context, this article will be to European debt crisis's background, reasons and impact to China and discusses the enlightenment.

1.The production of European Crisis and the current situation In the European World Cup in 2012, the Greek national football team can't continue to be "myth", no leading European football, but the country's economy, has been in the debt crisis plays the role of "leading". From the end of 2009 the government declared the state trapped into debt default risk on, threatening to Europe's sovereign debt crisis has continued for two and a half years long. In this process, Greece has been a leading role. The debt crisis in Europe is the European sovereign debt crisis. It refers to the debt crisis in Greece and other EU countries occurred after the 2008 financial crisis. With the increasing in Greek sovereign debt as a percentage of GDP, the likelihood of default of its sovereign debt is also increasing. In addition, market investors in Greek sovereign debt investment will decrease. Greece's economic growth as well as is expected to continue to decline. On December 8 in 2009, the three major rating agencies downgraded...
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