China s strong growth in the midst of the Asian crisis is striking. We explore features of China s financial system that helped insulate it from the crisis, and then try to assess whether China has avoided crisis or simply deferred it. In addition, China s external accounts remain strong. Whatever their other effects, capital controls may have played a role in preventing Chinese financial institutions from borrowing excessively abroad, and hence may have helped keep China s external fundamentals strong.
Clear risks remain for China s outlook.
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