China’s Growing Influence on Asian Financial Markets

By Serkan Arslanalp, Wei Liao, Shi Piao, Dulani Seneviratne

August 12, 2016

Preview Citation

Format: Chicago

Serkan Arslanalp, Wei Liao, Shi Piao, and Dulani Seneviratne. China’s Growing Influence on Asian Financial Markets, (USA: International Monetary Fund, 2016) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper finds that financial spillovers from China to regional markets are on the rise. The main transmission channel appears to be trade linkages, although direct financial linkages are playing an increasing role. Without an impact on global risk premiums, China’s influence on regional markets is not yet to the level of the United States, but comparable to that of Japan. If China-related shocks are coupled with a rise in global risk premiums, as in August 2015 and January 2016, spillovers to the region could be significantly larger. Over the medium term, China’s financial spillovers could rise further with tighter financial linkages with the region, including through the ongoing internationalization of the renminbi and China’s capital account liberalization.

Subject: Currency markets, Emerging and frontier financial markets, Financial markets, Financial sector policy and analysis, Global financial crisis of 2008-2009, Securities markets, Spillovers, Stock markets

Keywords: Asia and Pacific, Center, Center economy, China, Currency markets, Emerging and frontier financial markets, Equity markets, Equity price, Foreign Exchange Markets, Global, Growth outlook, Market, Market movement, Securities markets, Spillover coefficient, Spillovers, Stock markets, Trade linkage, WP

Publication Details

Pages:

37
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2016/173
Stock No:

WPIEA2016173
ISBN:

9781475525137
ISSN:

1018-5941

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