CHINA-ASEAN RELATIONS, PHILIPPINE PESO, MALAYSIAN RINGGIT, INDONESIAN RUPIAH, SINGAPORE DOLLAR – KEY POINTS:
- How did the covid-19 and trade war impact the China-ASEAN relationship
- Also, China and ASEAN fit into the Core-Perimeter model
- How changes in the Chinese growth impact ASEAN Forex: PHP, MYR, IDR, SGD?
The Association of the Southeast Asian Nations (ASEAN) revolves around the Chinese economy. The trading block is largely aimed at assisting promote economic growth in all participating nations like Singapore, Philippines, Malaysia, and Indonesia. Utilizing the Core-Perimeter, China works as the economic powerhouse, which is the core, which the ASEAN states firmly relied on as the source of growth (perimeter).
RELATIONSHIP BETWEEN ASEAN (SGD, IDR, MYR, PHP) AND CHINA
Technically speaking, china accounted for about 1/3 of the total trade in the ASEAN countries, when looking at the top 5 trading partners. The Chinese economy has matured gradually and shifted away from exports towards consumption as the main source of its economic growth. This makes china highly sensitive to all external shocks as compared to their ASEAN counterparts as Bitcoin Rallies Beyond $30,000 For The Very First Time.
Throughout the 2008 financial crisis, the market mood significantly dwindled alongside the baseline outlook for this growth. China’s YoY GDP dropped from the 2007 peak at 14% down to about 6% in 2009. During the recession, the ASEAN currencies rose as the capital rushed out of this perimeter amidst signs of weak growth from this core, a source of the regional block economic energy.
This is due to the fact that these perimeter economies (ASEAN) seem at risk of further experiencing the external shocks, which undermines its growth pattern from the core, a source of the region’s bloc economic energy.
This is because these perimeter economies (ASEAN) are at a huge risk of experiencing external shock, which undermines the growth zone as opposed to the core (CHINA) because of the cycle-sensitive nature. The latter economy has slowly shifted towards the consumer-based economy that gives it extra insulation to the external shocks than the outward-facing economy like those in the ASEAN.
ASEAN FX WEAKEN
As the Chinese growth started showing some stabilization signs, the possibility of a positive economic reverberation echoing out into the ASEAN neighbors precipitate the rush of the capital flowing into this trading block assets. The Philippine peso, Malaysian Ringgit, Indonesian Rupiah, Singapore Dollar all climbed with other growth linked instructions as indications of optimism from a core gave some hope for the economic recovery in this perimeter.
The China-ASEAN dynamic has an extra layer of complexity to it when taking into consideration how the Chinese Yuan performed as compared to the Asian neighbors. The assortment of unique situations has generated examples where the price action deviated from the patterns that had been implied in the core-perimeter model. A closer look at all the dynamics shown during the 2008 financial crisis, the Sino-China trade war, and the coronavirus pandemic in 2020 can greatly help the traders navigate such scenarios.