The ASEAN business cycle and China’s slowdown

Abstract

The economies in the Association of Southeast Asian Nations (asean) have been integrated through increasing trade relations intensified by tariff reductions and increasing openness to foreign direct investment. Rising volume of networks trade has deepened interconnectedness between asean and China, a recent growth locomotive in the world. asean business cycle is shaped by volatile China’s trade volume. As China’s expansion slows down, adverse consequences on asean economies have become more pronounced. The extent of the damage depends on each member of asean’s trade exposure and China dependency. This paper identifies the most vulnerable asean economies to China’s business cycle. The slowing down of the Chinese economy would undoubtedly result in a decline in long-term growth of some asean economies, unless appropriate policy responses can be implemented. 

JEL classification: E32, F43