In this paper we use a multi-region computable general equilibrium model to analyze the impact of the Asian crisis thus far, highlighting the implications of possible future developments in Japan and China. The main conclusion is that depreciation of the yen would tend to have an adverse impact on the rest of Asia, even if Japanese growth were to be restored. The reason is that the most affected Asian countries need to run trade surpluses over the medium-run due to weakness in domestic demand and a need to service foreign debt. A weak yen cuts into these surpluses by eroding the competitiveness of these countries both in the Japanese market and in relatively unaffected third country markets such as the United States and Western Europe. In contrast, modest devaluation of the reminbi, which restores China's external balance to its pre-crisis level, would have less impact than yen devaluation. A larger Chinese devaluation, however, would have a more negative impact on Asian trade. Moreover, any Chinese devaluation could spark renewed financial unrest. For this reason, we recommend that China focus on addressing its fundamental macro- and microeconomic problems. Under the current Chinese circumstances, exchange rate management is a second-order issue.