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Chinese Mercantilism: Currency Wars and How the East was Lost


  • Surjit S. Bhalla


The world changed on July 2, 1997 when Thailand floated the baht. Explanations abound on the origins of the crisis - indeed it is a growth industry. This study is part of that explosion. It has several objectives. Identification of the causes of the crisis is the most important goal. Why did it happen ? Why did the contagion happen ? What went wrong ? Was the East Asian miracle a mirage ? If causes are correctly identified, the correct policy response is expected to follow. If not, then developing countries may embark on another lost decade. A large part of the analysis centers around the proposition that the regime of fixed, quasi-fixed, managed exchange rates was at the core of the problem. In addition to managed exchange rates, the paper offers an additional contributory cause of the crisis - China’s mercantilist policy. [Working Paper No. 45]

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  • Surjit S. Bhalla, 2010. "Chinese Mercantilism: Currency Wars and How the East was Lost," Working Papers id:2751, eSocialSciences.
  • Handle: RePEc:ess:wpaper:id:2751 Note: Institutional Papers

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    References listed on IDEAS

    1. Scully, Gerald W, 1988. "The Institutional Framework and Economic Development," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 652-662, June.
    2. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    3. Zuliu F. Hu & Mohsin S. Khan, 1997. "Why Is China Growing So Fast?," IMF Staff Papers, Palgrave Macmillan, vol. 44(1), pages 103-131, March.
    4. Martin Feldstein & Philippe Bacchetta, 1991. "National Saving and International Investment," NBER Chapters,in: National Saving and Economic Performance, pages 201-226 National Bureau of Economic Research, Inc.
    5. Nicholas R. Lardy, 1994. "China in the World Economy," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 24.
    6. John G. Fernald & Hali J. Edison & Prakash Loungani, 1998. "Was China the first domino? assessing links between China and the rest of emerging Asia," International Finance Discussion Papers 604, Board of Governors of the Federal Reserve System (U.S.).
    7. Scully, Gerald W & Slottje, Daniel J, 1991. "Ranking Economic Liberty across Countries," Public Choice, Springer, vol. 69(2), pages 121-152, February.
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    Thailand; floated; crisis; important goal; East Asian;

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