"...China, Taiwan, India, Sri Lanka, Bangladesh, and Pakistan were little affected by the 1997/98 Asian financial crisis. The biggest difference between them and the crisis-afflicted countries lay not in homegrown things like “cronyism” or “government-directed investment” or “transparency” or “soundness of bank regulation,” but in the openness of the capital account. The countries with positive growth had a more or less closed capital account and did not develop a structure of financial claims vulnerable to investor pullout. That China has largely retained this structure gives it a degree of policy flexibility today far greater than most “liberalised” emerging Asian economies which accepted IMF/US Treasury reforms. The country’s comparative resilience in the face of a huge economic onslaught by short term Western portfolio speculative capital during that time, largely facilitated a reasonably quick recovery for emerging Asia as a whole, as well as acting as an important source of global import demand at a time when the rest of the region was experiencing depression-like conditions. Given China’s increasing role as a major economic locus for Asia, any slowdown in this growth momentum, even if only the hoped-for “soft landing”, must be particularly troublesome to a US administration desperately trying to extricate the rest of the world from its perpetual reliance on the American consumer to sustain growth.
China’s economy appears to have overcome the effects of the severe acute respiratory syndrome crisis, but unlike US authorities, China’s monetary officials have demonstrated a record of tackling potential problems before they become insurmountable bubbles (as evidenced by their approach to monetary policy during the early 1990s, where officials confronted a similarly overheated real estate market). In contrast to America’s current Fed chairman, China’s leading monetary officials do not deny the existence of a bubble in the real estate market, with the central bank recently noting in a disapproving way that cumulative housing lending in Shanghai was now Rmb134.8 billion ($16.3 billion), with the Rmb21.7 billion provided during the first half of this year, representing a 61% year-on-year rise.
China is not operating on an election timetable per se, but an Olympics timetable.
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