ABSTRACT
The Asian financial crisis has raised the level of international anxiety about potential instability in China. How stable is China? Can the country's strong external economic position turn around in a short period of time? Can the society and the political system cope with high and rising urban unemployment? Can agricultural surplus labor be absorbed elsewhere in the economy? Is inflation definitely under control or could it erupt again as happened several times since the beginning of the economic reforms in late 1978? In monitoring the Chinese economy, are we missing or misinterpreting important facts and dynamics as most analysts did in the case of Thailand, Indonesia, Malaysia, the Philippines, and Korea? Since nobody predicted the Asian financial crisis and few "saw it coming," it is prudent to assess China's economic strengths and vulnerabilities.
