Gauging the impact of China’s growth slowdown on emerging Asia // 대외경제정책연구원 // 아시아 신흥 중국의 성장 둔화의 영향을 계측

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Gauging the impact of China’s growth slowdown on emerging Asia

Abstract

• Concerns that economic deceleration in China could be sharper and more disorderly than expected have increasingly unnerved investors over the spill-over effects of China’s economic rebalancing and associated policy reactions on growth prospects and financial stability across emerging Asia. In this watch, we gauge the impact of China’s transition on emerging economies in Asia amid on-going issues surrounding China’s growth slowdown, the Yuan depreciation and financial market volatility.
• Amid China’s economic rebalancing, a cautious outlook for export-oriented economies across EM Asia is characterised by two key developments – 1) China’s growth slowdown is accompanied by the economy becoming less import intensive as its competitiveness improves and its services sector structurally outperforms the industrial sector, and that 2) China now poses greater export competition to other economies in the region as its exports move up the global value chain.

• We find Taiwan and Korea to be most vulnerable to a contraction in Chinese imports while Philippines, Indonesia and India are least affected. However, one should be cognizant of several offsetting effects to such a direct trade impact from 1) vertical trade integration with China, 2) export similarity, 3) countryspecific movements along the global value chain and its impact on the trade structure and 4) producer decisions to shift manufacturing bases to achieve cost efficiency.

• Despite elusive trade gains, recent growth outturns for EM Asia have been stable and broadly improving on the margins, driven by resilient domestic demand as low oil prices boost real incomes while inflation remains under control, allowing monetary and fiscal policy to turn accommodative.

	2016.03.25		대외경제정책연구원				9/0
	GaugingtheimpactofChina’sgrowthslowdownonemergingAsia.pdf GaugingtheimpactofChina’sgrowthslowdownonemergingAsia.pdf