Chinese Studies
2013. Vol.2, No.3, 144-148
Published Online August 2013 in SciRes (
Copyright © 2013 SciRe s .
The Impact of Global Financial Crisis on Health Status in the
Chinese Mainland*
Chen Li, Yao Lan, Jiang Hong
Economic Management College, Changzhou Unive rsity, Changzhou, Chin a
Received April 5th, 2013; revised June 26th, 2013; accepted July 6th, 2013
Copyright © 2013 Chen Li et al. This is an open access article distributed under the Creative Commons Attribu-
tion License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original
work is properly cited.
Nowadays, globalization increases the integration between countries, leading to the emergence of a global
marketplace or a single world market. And, no country or region can develop in self-seclusion. The finan-
cial crisis is unprecedented because it comes at a time of radically increased interdependence. What is
more, financial turmoil is contagious, moving rapidly from one country to another and spreading very
quickly from one economic sector to many others. Since the reform and opening up, China has made re-
markable economic achievements. Especially in the economic globalization trend, the financial sector has
developed rapidly and its influence on economy is also growing fast. However, along with the rapid de-
velopment of economy and the outbreak of financial crisis, economic factors play an important role in
modern society. Due to the influence of the current global financial and economic crisis, efforts to reach
health-related MDGs are confronted with daunting challenges. Public health departments of all countries
are faced with increased demand for their services (Liu Zhenmin, 2009), the risk of lower services quality,
contraction of financial resources as well as a higher risk of a “brain drain” of health professionals. Hence,
this paper aims to analyze the impact of the global recession on the health of people in the Chinese
mainland and sum up a series of measures to ensure the steady growth of national economy and safeguard
the social harmony and stability.
Keywords: Global Recession; Public Health; Financial Crisis; Impact
Since the US subprime mortgage crisis caused falling house
prices in 2007, the US economy has suffered a recession risk.
United States turned into a source of the most serious global
financial crisis since the 1930s. What is more, the mortgage
crisis triggered a worldwide financial crisis that spread to the
global economy (The research report, 2009). All kinds of signs
show that the crisis will not disappear within a short term. For
developing countries, the ability to withstand the financial crisis
is limited, and their social security system is relatively imper-
fect. Thus, the financial crisis is becoming a threat to the poor
peo ple in dev eloping countries, which means that the social pro-
gress there in the past several decades may have been seriously
damaged. As a result, the achievement of The Millennium De-
velopment Goals (MDGs) is facing enormous challenges.
Compared with the Asian financial crisis in 1998, the impact
of this financial crisis over China has the following characteris-
tics (World Bank, 2009): First, the financial crisis originated in
the United States, and the range affected by this financial crisis
was broader than Asian financial crisis. However, this financial
crisis had little effect on the China’s economy. Second, China’s
current dependence on export is higher than that in the past, and
the resistance to economic recovery may not only depend on
the economic situation. Third, the international investment
weakened China’s economic strength of enhancing the
ability to deal with the financial crisis. Fourth, China has built
up a relatively perfect social security system, including the
minimum living security, pension security, medical security sys-
tem. The system has significantly diminished the likelihood that
financial crisis turns into a social crisis.
The Financial Crisis Has a Greater Impact in Export
At present, the impact of the financial crisis on the process-
ing and manufacturing in the Chinese Mainland is enormous.
Its impact cannot be ignored. There have been a lot of problems,
such as decline in export trade, slow-down of economic growth,
unemployment as well as other macroeconomic issues. Figure
1 shows that the financial crisis has a great impact on export.
19961997 19981999 2000 20012002 20032004 20052006 2007 20082009
Total exports (left axis :billion)E x port growt h rat e(ri ght axi s)
Figure 1.
*Short paper. China’s export trade volume changes (%).
Specifically, the impact of financial crisis mainly occurred in
the export processing enterprises, and then spread to the entire
economic system. This financial crisis is different from the fi-
nancial crisis in 1998, which was caused mainly by the with-
drawal of large fund of international short-term liquidity. China
is the direct victim. But the Chinese government has a strong
U.S. dollar reserve to attract foreign investment by focusing on
long-term investment, which helps to better weather the Asian
financial. In 2009, the trends of international trade in the Chi-
nese Mainland exhibited a rapid decline. There was, moreover,
a 20% reduction in the monthly export volume compared with
that of the same period in the previous year. From the history of
the impact of the financial crisis, we learn that the financial
crisis had a great impact on the exports. For example, there was
stagnation in exports in 1998. And at this time, from the begin-
ning of the second half of 2007, the trend of growth rate kept
reducing obviously. In 2008, the export in the mainland of
China from January to September was 1.074 trillion US dollars,
which was an increase of 22.3%. After deducting price factors,
the actual increase of 11.8%, which means 8.1 percentage point
less compared with same period in the year before.
Reduction of Tax Leads Revenue to Reduce
China’s revenue has declined in the apparent crisis. Decline
in exports was mainly caused by the decrease of corporate prof-
its and related lower tax revenue. In addition, in the fourth
quarter of 2008, the government began to implement a proac-
tive fiscal policy in the mainland, which included implementa-
tion of structural and tax cut. There were other measures, such
as 1) value added restruct uring; 2) reform in tax for refined oil;
3) raising the export tax rebate rate; 4) reducing the export tariff
and so on. In addition, stamp duty on stock transactions de-
clined significantly, resulting in the decrease in the govern-
ment’s fiscal revenue.
The Financial Crisis Causes to Greater Volatility in
China’s inflation has grown rapidly, especially in food prices
in 2008. In response to this financial crisis, the government is-
sued a series of measures, such as infrastructure development
and boosting domestic demand, to ensure the steady growth of
national economy and safeguard the social harmony and stabil-
ity. It is worth noting that the government made an economic
stimulus plan, namely an investment plan of 4000 trillion Yuan
in two years. The government, as it seems, should focus on
strengthening social security. It is estimated that the new medi-
cal and health reform in the next three years will reach 850
billion investments. Financial crisis has become an opportunity
to develop health system in China, accounting for more than
1/5 of the entire economic stimulus package.
The Impact of Global Crises on Health
The impact of the financial crisis on China’s influence can-
not be ignored. It can be detected in the decline in export trade,
slow-down of economic growth, unemployment, and other mac -
roeconomic issues. Due to the current global financial and
economic crisis, public health departments of all countries are
facing increased demand for their services, the risk of lower
services quality, and contraction of financial resources. And the
impact of global crises on health includes different aspects of
the following.
A Reduction in Government’s Revenue and Its
Negative Effects on Public Health Input
China’s revenue suffered during the financial crisis. The de-
cline in exports was mainly caused by reduced corporate profits
and lower tax revenue. In addition, the government began to
implement a proactive fiscal policy and tax cuts in the fourth
quarter of 2008, which, in addition to a series of tax policies,
included restructuring value-added tax, refining oil tax reform,
raising the export tax rebate rate, reducing the export tariff,
provisionally cancelling the transfer of housing business tax.
What is more, stamp duty on stock transactions declined sig-
nificantly, which caused the decrease of the fiscal revenue.
Figure 2 shows a slight and gradual decline of the government
revenue after the resumption. The decline in 2002 was mainly
due to the discharge into the World Trade Organization com-
mitments, which resulted in a decrease of the general tariff
from 15.3% to 12%. In addition, the tax rate in finance and
insurance business was lowered in order to stop the implemen-
tation of policies of state-owned shares. During the crisis, the
growth rate of government revenue declined by nearly 13 per-
centage points. In 2009, the trends of all periods declined if
compared with their counterparts in the previous year. The gov-
ernment was facing enormous pressure on government revenue.
In conclusion, government revenue reduced because of the
implementation of economic incentives, which led to the de-
crease of the growth rate of health budget. As a result, the re-
duction in international assistance can lead to a decrease in the
use of health resources (Hicks & Wodon, 2000). In addition,
the reduction in the prevention of the budget for health services
(i n c ludin g h i gh blood pres sure, diabetes, AI DS an d tube r culos is)
may result in the decrease in health services accessibility, eq-
uity, and reduced availability. For example, Mexico’s GDP in
1994-1996 fell between 4.6 percent and its population in pov-
erty dropped by government investment of 23.7% (The research
re- port, 2009).
The Impact of Inflation on the Availability and
Affordability of Basic Health Services
Inflation and currency devaluation led to low imports of
medical equipment and high medicine prices, which resulted in
the decrease of the availability and affordability of health ser-
vices. In the Asian financial crisis (Pablo, 2009), due to the
devaluation of their currencies, some countries had to deal with
higher import prices of drugs and some related to medical
Figure 2.
The government’s financial income increases condition (%).
Copyright © 2013 SciRe s . 145
devices. This caused an increase of some international prices of
medical services, coupled with a reduction of income for their
residents. Such circumstances may affect the consumption of
medical services and utilization. From Figure 3, we can tell
that inflation had grown rapidly in the Chinese Mainland, espe-
cially in food prices in 2008 and the prices of medical services
in national economic development that were fundamental to
maintaining the normal range. The first half of 2008 food prices
was 15 percent higher than that in the last year’s growth. In
February of 2009, there was a negative growth, which contin-
ued until June 2009.
Increase in Proportion Payment of Individuals and Its
Effect on Inefficient Using of Health Services
The high costs of health care inflicts heavy financial burden
on some people and reduces them to poverty. In some countries,
the residents pay the proportion of costs accounted for more
than 50% - 60% (World Bank, 2008), the financial crisis forced
the residents to reduce use of health services. For example, in
the financial crisis, the inability to pay medical insurance costs
and loss of medical insurance forced the residents minimize the
use of preventive health services. According to a survey of
Argentina (The research report, 2009), the crisis in 2001-2002
forced 13% of the families to cancel the medical insurance. In
addition, 57% of households do not have access to preventive
health services. What is more, such high payment leads to inef-
ficient use of health services. The overall unemployment rate
increased slightly during the crisis.
Lower Real Incomes Led to a Falling Standard of
Living and a Negative Impact on Public Health
Residents lost their jobs, and hence their income and medical
insurance. Those people who were in basic livelihood cannot
afford to satisfy their need for public health care. And provision
of basic nutrition supply and medical care cannot meet people’s
demand. All of these factors may lead to decline in people’s
health conditions. It is estimated that shortage in world food
supply may cause malnutrition, which may have a negative
effect on 44 million people (World Bank, 2009). Figure 4 in-
dicates an increased pressure on current employment and re-
employment in the Chinese Mainland. The chart also showed a
growth of the unemployment rate in 2000-2003, which was
mainly due to reform the state-owned enterprise and the in-
crease of unemployment caused by laid-off workers. In both of
the financial crises, those indexes did not change significantly.
According to the survey, in 2008 the employment needs in
enterprises all over the country and the employment in urban
areas dropped on monthly basis. The numbers of new jobs in
Food (le ft axi s )Heal th care(r i gh e axi s)
Figure 3.
Index changes (%) in th e prices of food and Health Care Products.
33.1 3.1 3.1 3.1
3.6 44.3 4.2 4.2 4.1 44.2
1996 1997 19981999 20002001 2002 2003 2004 20052006 2007 2008
Figure 4.
Registered urban unemployment rate (%) in the Chinese Mainland.
July were 840,000, 550,000 when there were 38 million college
graduates in urban areas. Employment difficulties became more
serious (The research report, 2009). This situation is particu-
larly serious in the coastal and export-oriented areas, such as
Shenzhen 深圳, Dongguan东莞and other places.
In order to response to the financial crisis, the Chinese gov-
ernment has issued a series measures to strengthen the con-
struction of infrastructure and a number of policies to stimulate
consumption, which included the investment of 850 billion
RMB for the new medical and health system. The main meas-
ure is to strengthen the system of grassroots health service to
provide free public health services, such as basic drug system
and a basic medical insurance system. The aim of all the meas-
ures is to provide all residents with a high level of basic medi-
cal services.
The Measures to Ease the Health Problems
Affected by the Financial Crisis
The measures to deal with financial crisis include strength-
ening infrastructure construction, restoration and reconstruction
after the earthquake. The central government allocated 908
billion RMB on public investment in 2009 to fund education,
health care and other social construction. The plan involved the
reduction of some taxes, cancellation of 100 administrative fees
and charges, raise of the standards of personal income tax col-
lection, and some other measures. This was expected to reduce
the burden of businesses and residents about 5000 billion RMB
in 2009 and thereby raise the consumption level of residents
(Batniji & Woods, 2009). It included a series of measures to
strengthen social security in the comprehensive economic
stimulus plan, such as increasing the input of social security,
implementing the new measures of the medical and health sys-
tem and so on. The government made a timely response to the
financial crisis, and it helped to maintain the stability of the
economy system and the lives of the residents.
Improving the Living Conditions of Poverty
Residents and Protectin g the Basic Needs of Life
In order to improve the living conditions of the poor and
meet their basic living needs, the plans included measures to be
taken in education, housing, medical care and comprehensive
social security measures and so on. The specific measures in-
clude the following:
First, improvement of the level of basic education: The gov-
ernment decided on a new provision of 47 billion RMB for
compulsory education in rural area, which would make it pos-
sible to provide both free textbooks for rural compulsory edu-
cation and a living allowance to rural students. In response to
Copyright © 2013 SciRe s.
financial crisis (World Health Organization, 2009), it also pro-
vided four months’ temporary living allowance to college stu-
dents in 2008.
Secondly, strengthening the housing security system: the
plan required that, during 2009 to 2011, the existing housing
difficulties of 7.47 million low-income families in urban areas
should be basically solved (World Health Statistics, 2012).
About 100 billion RMB would be allocated for this purpose
within the next three years.
Thirdly, increasing subsidies for low-income groups: The
central government invested a total of 146.136 billion RMB for
employment, urban and rural development in 2008 (The re-
search report, 2009). The plan had improved the standard of
financial subsidy for the people of subsistence allowance twice,
once on January 1, and the other time on July 1, 2008. The
standard of compensation in urban was 15 RMB and that in the
rural was 10 RMB. The total number of financial subsidy
reached 36.31 billion RMB (The research report, 2009), which
increased the basic pension of enterprise retirees.
Other measures included increasing the constructors of the
social security system and community service system, and en-
suring proper placement for unemployed migrant workers, and
so on. Thanks to the series of measures as part of the reform in
social security, the basic living conditions of residents were not
affected by the crisis.
The Gov ernment’s Invest ment in Basic Medical
Insurance Should Be Increased to Reduce the Burden
on Resident Effectively
The investment aims to coordinate the promotion of public
health as a response to the financial crisis and effectively guar-
antee input in public health. On the basis of formulating eco-
nomic stimulus packages, all countries should prioritize the
achievement of health-related MDGs, provide adequate finan-
cial guarantee to public health departments, and, wherever pos-
sible, minimize the impact of the crisis on poor families. It is
also necessary to strengthen policy coordination among various
departments, promote social activities, and expand the coverage
of public health service system.
In order to enhance the capacity of reducing citizens’ eco-
nomic risks caused by disease, there were also plans to prevent
illness and the resultant poverty. According to the spirit of the
new medical and health reform, medical insurance systems for
staff members and workers, medical insurance systems for
resident and new rural cooperative medical systems will cover
all residents of urban and rural areas in three years. In addition,
insurance rates are increased to 90%.
In order to reduce the burden on individuals, there are fol-
lowing major governmental measures to improve the insurance
of health care:
Firstly, expanding the coverage of medical insurance system
for resident in cities and towns increases the protected popula-
tion. In 2008 there would be 229 pilot cities with basic medical
insurance system for citizens in cities and towns. Since 2009,
the government has endeavored to expand the pilots for medical
insurance system for resident in cities and towns in order to
include all college students in the medical insurance system,
and support the retirees from closed and bankrupted state-
owned businesses so they can be included in the basic medical
insurance system for staff members and workers in cities and
Secondly, it is important to upgrade the level of government
investment. In 2009 the government raised the standard of the
new rural cooperative medical care to 80 RMB per capita. Later
it reached 120 RMB in 2010 (World Health Statistics Report,
2011). The other plans aimed to reform the compensation
method. In 2009 the cap line of new rural cooperative medical
(maximum payment limits) was 6 times higher than the local
farmers’ income per capita.
Thirdly, it is noticeable to increase the standard of urban and
rural medical assistance. In 2009 there was 6.45 billion RMB
subsiding for medical insurance reimbursement. It still provides
second chance of reimbursement for residents, who has heavier
burden on normal lives.
Through compensation, health care can greatly reduce the
financial burden on individual residents (Sinaha & Ahmad, 2009).
In addition, the first clinic in community and the compensation
for out-patient clinics can both minimize the proportion of the
burden on individuals wherever possible.
The Importance of Policy Implementation
In order to make sure the reforms in medical and health care
proceed smoothly, the central government has also taken some
other measures, which include the following:
1) Legislation for social security. This is to institutionalize a
long-term provision of social security and optimize the social
security system.
2) Setting up an inter-departmental and co-ordination leading
agency, responsible for co-ordinating, organizing and coordi-
nating the work of reform. For example, it establishes a “State
Council Leading Group deepening for the medical and health
system” in medical and health system reform.
3) Merging some government departments. For example, it
puts the State Food and Drug Administration 国家食品药品监
督管理局 into the regulatory jurisdiction of the Ministry of
Health 卫生部, and in so doing, improves the coordination of
relevant departments and enhances efficiency. And the ministry
of health was incorporated into the national health and family
planning commission 国家卫生和计划生育委员会 in 2009.
4) Making sure the implementation of health reform is in
place. It is expected that all levels of government invest 850
billion RMB for the new medical and health system, of which
the central government has invested 331.8 billion RMB.
The central government’s measures to unify leadership and
the legislature are very important. They ensure a proper func-
tioning of the social security system, a proper implementation
of the health reform, and a proper coordination of other meas-
ures. Together, they will reduce the impact of the financial
crisis on the residents to the minimum.
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at the high-level Forum on Advancing Global Health in the face of
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