Legacies of the Asian Financial Crisis

I've heard two people talk about the Asian Financial Crisis lately.

- Yesterday, during our daily call with our partner, we were asked about China's recent assertiveness, with regards to the naval confrontation and other actions. One of our analysts replied that this is nothing new and China's view of itself as Asia's premier power really dates to the Asian Financial Crisis in 1997-98. You'll recall that then, as now, China did not devalue its currency. It could stand up, unlike its weaker Asian peers.

- On Tuesday, I had dinner with a few fairly knowledgeable people on China's political economy. One of them, a Yale-trained Ph.D. economist, said that in his view, the reaction to the Asian Financial Crisis (more savings in emerging economies) really helped to trigger global imbalances. Others have said this too. BUT, it was pointed out, why did the reserve accumulations rise the most only in recent years? SIMPLE, said he, that has to do with the gradualist tradition of Chinese policy making. But the policy direction was set after the crisis.


The chickens is come home to roost? I wonder, looking back 10 years from now, what sea changes we will devine from this crisis.