China’s Increasing Economic Linkages with ASEAN and the Potential Spillover Effects

August 1, 2018

With China’s economy growing and economic restructuring further proceeding, China’s economic linkages with ASEAN countries have been rising, with potential spillover effects through different channels. Goods trade is the most important channel, while many ASEAN countries have benefited from the increased number of outbound tourists from China. China’s outward direct investments (ODIs) to ASEAN have increased steadily and are largely concentrated in manufacturing, wholesale and retail trade, as well as leasing and commercial services. Financial development in China has had an impact on ASEAN, mostly through the effects of market sentiments. Growth shocks in China can have a significant impact on ASEAN.

Going forward, China’s economic linkages with ASEAN are likely to increase further. Policy adjustments should be considered to capture the opportunities as well as cope with challenges stemming from China’s increasing spillover effects.


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