Question

Why did China fare much better than the United States and the United Kingdom during the 2007-2009 financial crisis?

Short answer

China's economy is less reliant on the financial markets, and the Chinese authorities also pursued expansionary monetary policy and massive fiscal stimulus in response to the crisis.

Step-by-step solution

Step 1. Concept of Aggregate demand 

Aggregate demand refers to the economy's overall demand for final goods and services at any one time. The total amount of final goods and services provided into an economy's market in a given period of time is known as aggregate supply.

Step 2. Explanation

China fared significantly better than the United States and the United Kingdom because its economy is not as closely linked to the financial markets. However, because the United States and the United Kingdom are so closely linked to the financial markets, they are more affected by the financial crisis than China. During the financial crisis of 2007-2009, Chinese authorities also pursued expansionary monetary policy and massive fiscal stimulus in response.