Traces China’s foreign debt policy from 1978 to the present and compares its short and long term debt structure with Indonesia, Korea, Malaysia, the Phillippines and Thailand (i.e. five countries suffering from the Asian economic crisis). Points out that in the 1980s, when all six had high growth rates, China had a severe financial crisis while the others did not: a situation reversed in the 1990s. Compares four debt service capacity indicators for the six, using data from 1983‐1990 and 1991‐1997 to explore the factors causing financial crisis and shows that the ratio of short‐term to total debt is the most important indicator. Discusses the implications for the policies of developing countries and warns that “the hot‐bed for...financial crises still exists”.
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