Exchange Rates and Chinese Competitiveness: Implications for Emerging Economies

The Asian financial crisis has generated a lot of research, analysis and debate. The exact causes of the crisis are not firmly established, although various hypotheses have been offered. This paper presents one view of the genesis of the East Asian crisis. Several explanations are examined: managed exchange rates, over and undervalued currencies, crony capitalism, asset bubbles, Japanese devaluation, or “too much” capital account liberalization.