{
  "title": "When China Sneezes Does ASEAN Catch a Cold?",
  "publication": "IMF Working Papers, November 10, 2016",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/when-china-sneezes-does-asean-catch-a-cold-44385",
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  "summary": "This paper looks at the effects of a China slowdown on Emerging Market Economies (Indonesia, Malaysia, and Thailand) and Frontier Developing Economies (Cambodia, Lao P.D.R., and Vietnam) in ASEAN.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Paper examines effects of a China slowdown on Emerging Market Economies (Indonesia, Malaysia, and Thailand) and Frontier Developing Economies (Cambodia, Lao P.D.R., and Vietnam) in ASEAN.\n- Main conclusion: the impact of China growth shocks on ASEAN has risen since the global financial crisis."
    },
    {
      "heading": "Quantitative findings",
      "content": "- A one percent decline in China’s growth implies:\n  - a 0.3 percent reduction in growth for ASEAN EMEs.\n  - a 0.2 percent reduction in growth for ASEAN FDEs.\n- These magnitudes are double what they were two decades ago due to stronger trade and financial linkages.\n- An important component of inflation is shared between ASEAN and China."
    },
    {
      "heading": "Transmission channels and financial effects",
      "content": "- Real-economy channel: China slowdown translates into lower growth in ASEAN economies (EMEs and FDEs as quantified above).\n- Financial channel: China slowdown is associated with slower credit growth and lower equity prices in ASEAN.\n- Mechanisms consistent with observed effects:\n  - Portfolio balance channel.\n  - Signaling channel, where ASEAN market participants absorb news on China economic activity as an indicator over domestic growth prospects."
    },
    {
      "heading": "Time variation and linkages",
      "content": "- The strength of China→ASEAN spillovers has increased since the global financial crisis.\n- Stronger trade and financial linkages relative to two decades ago explain the roughly twofold increase in the magnitudes of spillovers."
    },
    {
      "heading": "Subject coverage and keywords (as labeled in the paper)",
      "content": "- Subjects: Asset prices, Business cycles, Economic growth, Economic recession, Financial cycles, Financial sector policy and analysis, Inflation, Prices.\n- Keywords: ASEAN, ASEAN inflation cycle, ASEAN inflation volatility, Asset prices, Business cycles, China, China growth slowdown, does ASEAN, economic activity, Economic recession, financial, Financial cycles, Global, growth shock, Inflation, spillovers, time-varying, WP.\n\nWhen China Sneezes Does ASEAN Catch a Cold? By Sohrab Rafiq, November 10, 2016.\n\n---\n\n Content in this bundle\n\n- When China Sneezes Does ASEAN Catch a Cold?\n  - When China Sneezes Does ASEAN Catch a Cold? (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - When China Sneezes Does ASEAN Catch a Cold? (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/when-china-sneezes-does-asean-catch-a-cold-44385"
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    "Authors: Sohrab Rafiq",
    "Published: November 10, 2016",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781475552607.001",
    "Paper examines effects of a China slowdown on Emerging Market Economies (Indonesia, Malaysia, and Thailand) and Frontier Developing Economies (Cambodia, Lao P.D.R., and Vietnam) in ASEAN.",
    "Main conclusion: the impact of China growth shocks on ASEAN has risen since the global financial crisis.",
    "A one percent decline in China’s growth implies:",
    "These magnitudes are double what they were two decades ago due to stronger trade and financial linkages.",
    "An important component of inflation is shared between ASEAN and China.",
    "Real-economy channel: China slowdown translates into lower growth in ASEAN economies (EMEs and FDEs as quantified above).",
    "Financial channel: China slowdown is associated with slower credit growth and lower equity prices in ASEAN.",
    "Mechanisms consistent with observed effects:",
    "The strength of China→ASEAN spillovers has increased since the global financial crisis.",
    "Stronger trade and financial linkages relative to two decades ago explain the roughly twofold increase in the magnitudes of spillovers.",
    "Subjects: Asset prices, Business cycles, Economic growth, Economic recession, Financial cycles, Financial sector policy and analysis, Inflation, Prices.",
    "Keywords: ASEAN, ASEAN inflation cycle, ASEAN inflation volatility, Asset prices, Business cycles, China, China growth slowdown, does ASEAN, economic activity, Economic recession, financial, Financial cycles, Global, growth shock, Inflation, spillovers, time-varying, WP.",
    "**When China Sneezes Does ASEAN Catch a Cold?**"
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