CHINA-ASEAN RELATIONS, SINGAPORE DOLLAR, INDONESIAN RUPIAH, MALAYSIAN RINGGIT, PHILIPPINE PESO – TALKING POINTS
- How do changes in Chinese growth impact ASEAN FX: SGD, IDR, MYR, PHP?
- How did the trade war and coronavirus impact the China-ASEAN relationship?
- How the relationship between China & ASEAN fits into the core-Perimeter model
The Association of Southeast Asian Nations, also known as ASEAN, orbits the world’s second-largest economy – China. The bloc is aimed at helping to promote economic growth in participating countries such as Indonesia, Malaysia, the Philippines, and Singapore. Using the Core-Perimeter model, China functions as the economic powerhouse (core) which ASEAN states strongly rely on as a source of their growth (perimeter).
THE RELATIONSHIP BETWEEN CHINA AND ASEAN (SGD, IDR, MYR, PHP)
On average in 2018, China accounted for one-third of total trade in ASEAN nations, when looking at their top five trading partners. China’s economy has been maturing and gradually shifting away from exports and towards consumption as the primary source of economic growth. This makes the East Asian giant relatively less sensitive to external shocks than its ASEAN neighbors.
This is because those perimeter economies (ASEAN) are more at risk of experiencing external shocks that undermine their growth trajectory than the core (China) due to their cycle-sensitive nature. The latter’s economy has been slowly shifting towards a consumer-based economy, which gives it more insulation to external shocks than outward-facing economies like those in ASEAN.
As Chinese growth began to show signs of stabilization, the prospect of that positive economic reverberation echoing out into its ASEAN neighbors precipitated a rush of capital flowing into the bloc’s assets. Singapore Dollar, Indonesian Rupiah, Malaysian Ringgit, Philippine Peso all rose with other growth-oriented instruments as signs of optimism from the core gave a flicker of hope for an economic recovery in the perimeter.
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