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Fixed Income
China reopening should benefit parts of EM Asia
Koon Chow
Investment Analyst
Stephen Green
China economist Based in Hong Kong

Spillovers from China’s reopening will be mostly positive. The main channels are through tourism, goods imports and commodity prices.

While tourism out of most countries started to recover in 2021/22, the recent pick up domestic and online ticket searches suggest that it is only just starting in China, helped by the easing in travel restrictions. The greatest impact is likely to be felt by countries close to China and those with large tourism sectors, such as Thailand, Singapore and Korea.

Chinese imports fell sharply in the second half of 2022 due to weighing on global goods demand1. While China’s rebound is likely to be felt more strongly within services, goods imports should also pick up as consumption rises.  Again, the effect will be felt most strongly in Asia, in particular Malaysia, Korea and Thailand.

Exports to China

Exports to china

Data as at December 2022, except for India and Thailand where data is as at November 2022. Source: CEIC

China is a major importer of commodities and so a recovery in Chinese demand should support co    mmodity prices. This should benefit commodity-oriented exporters, including countries in the Middle East (oil), Latin America (iron ore, copper etc) and South Africa (precious metals). Meanwhile, higher commodity prices are likely to be a small drag for commodity importers, most of which are in Asia and mixed for Latin America and the EMEA region.

Current account positions in Korea, Thailand and Malaysia should all be helped by China’s reopening, pushing them all into (more) solid surpluses. While all three currencies are likely to benefit from this, the Thai baht is likely to see the strongest support. The Chinese yuan, meanwhile, is expected to stabilise from here as stronger portfolio inflows are likely counterbalanced by a deterioration in China’s current account balance. 


1. As at 23 January 2023. Source: Goldman Sachs

Koon Chow is a fixed income investment analyst at Capital Group with research responsibility for China and emerging Asian sovereigns focusing on both eurobond and local currency instruments. He holds a master's degree in economics for development from Oxford University and a bachelor's degree in economics from Cambridge University. Koon is based in Singapore.

Stephen Green is an economist at Capital Group, responsible for covering Asia. He has 18 years of investment industry experience and has been with Capital Group for eight years. He holds a PhD in government from the London School of Economics and a first-class honours degree in social and political sciences from Cambridge University. Stephen is based in Hong Kong.


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