East Asia’s policy dilemmas

Among the East Asian economies, the two large countries - Japan and China - hold 65% of the region's reserves. In 2005, they accounted for more than 70% of the region's current-account surplus. It is therefore clear that as long as they are unable to reduce their surpluses, other smaller East Asian countries individually or collectively can not do much to halt a further increase in the transpacific imbalance by augmenting domestic demand, simply because there are few economies which could ref