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AXA IM's Aidan Yao: China – Exerting its influence over Asia


Aidan Yao, Senior Emerging Asia Economist at AXA Investment Managers (AXA IM), assesses China’s economic and financial spill-overs in the region.


Key points:

  • The economic and financial influence of China on the rest of Asia has grown in recent years, thanks to its rising economic power and growing trade and investment ties with other countries.
  • Significant, albeit uneven, trade exposure means that Asia is vulnerable to China’s economic slowdown. However, not every country stands to lose from China’s economic rebalancing, given their different sector exposures.
  • Financial market correlations between China and Asia have risen markedly, as the former liberalises the capital account. Our analysis revealed a significant and growing influence of China on other Asian markets since the liberalisation of the renminbi (RMB).
  • Aggregating economic and financial market linkages, we estimate that a 1 percentage point (pp) decline in China’s GDP could lower Asia’s growth by up to 0.4pp. The impact on developed market economies is smaller but statistically significant for the US and EU.
  • Results of this study mean that some of Trump’s economic policies – on trade and foreign exchange (e.g. labelling China a currency manipulator) – could have a far-reaching impact on the rest of Asia, even if they are designed to affect only the Sino-US relations.


To read the full research note by Aidan Yao, please see here.


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AXA Investment Managers is an active, long-term, global, multi-asset investor focused on enabling more people to harness the power of investing to meet their financial goals. By combining investment insight and innovation with robust risk monitoring, we have become one of the largest asset managers in Europe with ambitions to become the chosen investment partner of investors around the world.  With approximately €700bn in assets under management as of end September 2016, AXA IM employs over 2,350 people around the world and operates out of 29 offices in 21 countries. AXA IM is part of the AXA Group, a global leader in financial protection and wealth management.

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