The widely held view of the Asian Financial Crisis is that it had no substantial impact on China. In fact, the country was far more vulnerable than most people realized, due to the high possibility of financial contagion entering the system from Hong Kong through Guangdong province. This book analyzes the severe policy challenge that it presented for Chinas leaders.

The crisis in Guangdongs financial institutions provided a forewarning of the difficulties that lay ahead as Chinas integration with the global financial system deepened. The experience of Guangdong in the Asian Financial Crisis provided a profound lesson for Chinas policy-makers as they planned the countrys strategy for financial reform in the following years. China was able to avoid disaster by astute and difficult policy choices, in the face of fierce pressure from outside the country, as well as from different domestic interests at many different levels. The successful resolution of the crisis provided a breathing space for the leadership. It gave it time to undertake necessary reforms in the country's financial system in the decade that followed the crisis.