China's exports are already recovering. Despite recent concerns over Thailand, it has a much more robust underlying external and fiscal position than countries that have run into trouble elsewhere. East Asia has enviable macroeconomic conditions and terrific growth momentum. Yet deep international engagement and effective government support for growth have ensured that East Asia has continued to put its substantial investments to good use. Even in China, with its inefficient state enterprise sector, overall productivity growth exceeds that of the United States both in its early period of industrialization and now.
Savings also provide an effective short-run financial cushion.
Moreover, the growth momentum is coming increasingly from within the region. Excluding Japan, trade within the region has risen from 20 percent in 1980 to 33 percent in the mid-1990s, and more than two thirds of inward foreign investment now comes from other East Asian economies. While the momentum is strong, there are six areas where policy and institutional development are necessary to sustain rapid, socially responsible and quality development into the next century Providing infrastructure . Infrastructure bottlenecks run the risk of raising costs, hurting competitiveness and reducing the quality of life of households. Meeting these needs efficiently can only be done by substantially increasing the role of the private sector in major segments of infrastructure provision.