In the case of the emerging economies in East Asia, what matters is not the adjustment of existing structures, but rather the creation of new ones. The Asian countries must overcome the prevailing bilateralism to be able to benefit from the international division of labour more than has been the case thus far. This includes establishing an institutional framework for their regional cooperation.
China’s political and economic development will depend largely on how the country deals with its growing internal imbalances, for example, the tensions between urban and rural areas to name just one. In China, the most pressing reform project is the creation of a well-functioning financial system able to channel national savings towards efficient uses and as an important step towards more exchange rate flexibility.