This report looks at three sets of issues underlying the present cyclical moment and the outlook for East Asia. First, the evolution of the world economy is always relevant in as open and globally integrated a region as East Asia. Japan's economy seems to have finally returned to broad-based and sustainable growth, while the U.S. economy is growing at 4-5 percent. Global high technology industries appear to have returned to a phase of multi-year expansion (no doubt with quarter to quarter fluctuations). Rising world demand has helped pull primary commodity prices sharply higher, a boon to some of the low-income, commodity exporters in the region, if not to their more industrially developed, commodity importing neighbors. The second set of issues centers on the emergence of China as the economic powerhouse of the region, its rapid integration with other Asian economies and the region wide opportunities, risks and policy challenges that are coming up as a result. Over the last decade the structure of intra-East Asian trade with China has been transformed by the emergence of intricate and sophisticated production networks between countries. For two years now the boom in the Chinese economy has contributed around half the export growth in many other East Asian economies. A third set of issues in this report are the policy efforts undertaken by countries to address domestic challenges as well as international and regional ones. While domestic and foreign direct investment is booming in economies like China and Vietnam, it has only just begun to recover in Thailand, and remains weak in several of the other economies hit by the 1997-98 financial crisis.