This project is aimed to analyze the fundamental causes of the current financial crisis in the United States and its impacts on the economic relationship between China, the EU and the USA. Our analysis shows that the current financial crisis in the USA is a result of its loose monetary policies in the short run, but its deepest sources lie in its structural imbalance and its high income inequality since the 1990s. Since these deep problems cannot be removed as quickly as expected, the impacts of this crisis will last for some time. As a result, the very important relationship, that is the triangular economic relationship between China, the EU and the USA formed in the last decades, will change. Namely, the USA will continue to decline along its old road in the long run; the EU will be hit hard in the short run, but in the long run it will become stronger than ever before; and China will rise substantially in the world’s economic rank because of the scale effects in its domestic market, except that much pressure is falling and will still fall upon its employment sectors. The economic relationship between China, the EU and the USA will maintain as ever before but some changes will appear as a result of the financial crisis. China’s position as “world factory” will not change much, but its products will move downward along the value chain, being more technology and knowledge based, more domestic oriented, while the EU’s production pattern will become more environmentally friendly as well as technologically and knowledge intensive, and the USA’s service sector will be much reinforced as a result.