ABSTRACT
Although China’s integration with the world economy has brought increased wealth, it also made the country more susceptible to global economic shocks, ranging from high commodity prices that are imported (such as oil, coal and food products) to macroeconomic downturns caused by a drop in export demand (such as the Asian financial crisis of 1997 and the global financial crisis of 2008). This is particularly important as China is reliant on labor-intensive export industries which could severely affect social stability if demand from export markets drops. This is the reason why it is critical to manage the risk of macroeconomic vulnerability.
