How the Chinese – ASEAN Relationship Impact PHP, MYR, IDR, SGD

CHINA-ASEAN RELATIONSHIP, PHILIPPINE PESO, MALAYSIAN RINGGIT, INDONESIAN RUPIAH, SINGAPORE DOLLAR

Key Points:

  • How the relations between ASEAN & China fits in the Core-Perimeter Model.
  • How Coronavirus and the trade war’s impact the ASEAN-China Perimeter.
  • How the changes in China’s economy affect the ASEAN FX: PHP, MYR, IDR, SGD?
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The relations between the ASEAN, also known as the Association of South Asian Nations, surrounds the world’s 2nd largest economy. This block aims to help promote the economic growth of participating nations like Singapore, the Philippines, Malaysia, and Indonesia. Utilizing this core-perimeter model, Chinas works as the economic powerhouse (core) that ASEAN states largely count on as the primary source of the growth, which is the perimeter.

The Relations Between ASEAN & China (PHP, MYR, IDR SGD)

Essentially, China accounted for about a third of the overall trade in the ASEAN nations, when considering their top trading partners. Chinas economy has matured and gradually shifted from exports and towards the use as the main source of this economic growth. This significantly makes china an economic giant that is highly extensible to external shock as compared to the ASEAN neighbors.

How-China-ASEAN-Relations

Back in the year 2008 financial crisis, the market mood significantly declined alongside the baseline overview for growth. China has over the year fell from previous years high at about 14% down to about 6% in 2009. During the recession, the ASEAN currencies plunged with the capital rushing out of this perimeter as signs of weak growth from the main core, which is the primary source of the territories bloc’s economic energy.

china relations

This is because the perimeter economies, especially the ASEAN are more prone to experiencing external socks, which threatens to undermine the current growth path as opposed to the core, which is china because of the cycle-sensitive aspect. Chinas economy has slowly shifted towards the user-based economy that gives it an additional insulation to the external shocks as compared to the outward-facing markets such as those in the ASEAN.

The Chinese growth started showing stabilization signs, the prospects of this positive economy reverberation diving right into the ASEAN neighbors that precipitate the rush of the capital that flows into these region assets. The Philippine Peso, Malaysian Ringgit, Indonesia Rupiah, and the Singapore Dollar rose with external growth-focused instruments as an indication of great optimism from the core which gave some level of hope for the economic recovery in this perimeter.

china-ASEAN model

The current relationship between China-ASEAN has another great complexity layer when taking into consideration how the Yuan performed about the Asian nations. The assortment of great circumstances has generated examples where the price action deviates from a pattern that is implied in this Core Perimeter Model. A closer look into these dynamics was manifested in the current 2008 financial crisis, the Coronavirus pandemic and USA-trading china trade war can assist investors to navigate the same scenarios and be prepared for situations if the core-perimeter model assumptions are set aside.

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