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In his Testimony on June 23 2005 before the U.S. Senate Committee on Finance, Alan Greenspan, Chairman of the Federal Reserve Board, remarked, "The enhanced integration of China into the world trading system is having notable effect on Asia's trade with the rest of the world and on trade within Asia. After having risen rapidly through the 1990s, U.S. imports from Asia excluding China have flattened since 2000. This has occurred as production within Asia has evolved, with the final stages of assembly and exporting to the United States and elsewhere becoming increasingly concentrated in China." The phenomenon is called East Asian production networks whereby production processes are fragmented across national borders in the region. This development is undeniably related to the global imbalance problem. Several studies showed that the build-up of an unsustainable payment imbalance in the U.S. was substantially mirrored in the reserve accumulation by East Asian countries including China notably. These studies predicted that unless "coordination and shared responsibility" led to a gradual adjustment of it, the world economy would move toward a major crisis. Some authors even predicted an imminent collapse of the U.S. dollar, and a global financial meltdown. A global financial crisis indeed began in 2008. The crisis has accompanied a prolonged economic slowdown across the developed and developing world. An unwinding of the imbalance has progressed but in a disorderly way. The moral of this research is that real exchange rate changes and redistribution of world expenditures will continue to play key role in the process of international adjustment. However, our focus would be on how it would affect East Asian exports within the region and between East Asia and the rest of the world. We apply an empirical framework that essentially incorporates the fact that production within Asia has evolved. The consideration has an important implication. It is that