In recent years, China becomes the second largest economy in the world. Therefore, China has an important role in the Asia and Global Economy. China’s rapid economic growth is why the Renminbi (China currency) becomes an international currency. In October 2016, the International Monetary Fund (IMF) recognized Renminbi as an international currency by including it in the global reserve currency (Special Drawing Right). Furthermore, Renminbi is in the top 10 traded currencies in the world, even in Asia. In global trade, China has trade relation with various countries, so it can benefit countries with economic relations with China, especially countries in Southeast Asia, which is a member of the ASEAN-China Free Trade Area (ACFTA). The purpose of Renminbi Internationalization is to increase China’s economic growth and spillover from China to ASEAN. China’s economic spillover to ASEAN has been growing in the few past years through financial linkage and trade linkage. This paper examines China’s economics spillover to ASEAN-6 (Singapore, Malaysia, Thailand, Philippines, Indonesia and Laos) before and after Renminbi internationalization through trade and financial linkage. We use the ratio of ASEAN-6’s exports and imports to China to its total exports and imports as a proxy of trade linkage and ASEAN-6’s Stock Price Index as a proxy of financial linkage. In contrast, we use the claim and share of Renminbi in global foreign exchange reserve as a moderator variable to find out whether the Renminbi internationalization can strengthen China’s economic spillover to ASEAN-6 or not. Thus, we use Moderated Regression Analysis and Panel Least Square method in 6 ASEAN countries from 2012:Q1 2018:Q4. The result indicates that Renminbi Internationalization can strengthen China’s economic spillover to ASEAN-6 economies that can be seen through trade linkage with an increase in imports and through financial linkage with an increase in Stock Price Index. The findings imply that China can be a good prospect for the growth of emerging market countries in Asia; policymakers must pay attention to the spillover from China or the US economy.

1. Ahuja, M. A., & Nabar, M. M. (2012). Investment-led growth in China: Global spillovers (WP/12/267). International Monetary Fund, Washington, DC, WA. doi:https://doi.org/10.5089/9781475556414.001
2. CEIC Data. (2019). GDP nominal. Retrieved from https://bit.ly/2Dlqs1d
3. Constantinescu, C., Mattoo, A., & Ruta, M. (2018). Trade in developing East Asia: How it has changed and why it matters. In Policy research working papers. Washington, DC, WA: The World Bank. doi:https://doi.org/10.1596/1813-9450-8533
4. Daohua, D. (2015). Analysis of the RMB’s chance to be included in the SDR. Hong Kong: Economics & Strategic Planning Department, Bank of China (Hong Kong).
5. Dizioli, A., Guajardo, M. J., Klyuev, M. V., Mano, R., & Raissi, M. M. (2016). Spillovers from China’s growth slowdown and rebalancing to the ASEAN-5 economies (Working paper). International Monetary Fund, Washington, DC, WA.
6. Drummond, P., & Liu, E. X. (2015). Africa’s rising exposure to China: How large are spillovers through trade? International Advances in Economic Research, 21(3), 317–334. doi:https://doi.org/10.1007/s11294-015-9537-9
7. Furceri, D., Jalles, J. T., & Zdzienicka, A. (2017). China spillovers: New evidence from time-varying estimates. Open Economies Review, 28(3), 413–429. doi:https://doi.org/10.1007/s11079-016-9430-z
8. Guajardo, M., & Rönnqvist, M. (2016). A review on cost allocation methods in collaborative transportation. International Transactions in Operational Research, 23(3), 371–392. doi:https://doi.org/10.1111/itor.12205
9. Henning, C. R. (2013). Choice and coercion in East Asian exchange-rate regimes (Working paper no. 12-15). Peterson Institute for International Economics, Washington, DC, WA.
10. International Monetary Fund. (2016). World economic outlook (Tech. Rep.). International Monetary Fund, Washington, DC, WA. Retrieved from https://bit.ly/34lgU22
11. International Monetary Fund. (2019). World currency composition of official foreign exchange reserve. Retrieved from https://bit.ly/2XNFAxQ
12. Jayakarya, E. (2014). Internationalization of Chinese currency. Jurnal Hubungan Internasional, 7(1), 17-30.
13. Kenen, P. B. (2009). Currency internationalisation: An overview. New Jersey, NJ: Princeton University Press.
14. Liana, L. (2009). Use of MRA with SPSS to test the effect of moderating variables on the relationship between independent variables and dependent variables. Jurnal Teknologi Informasi DINAMIK, 14(2), 90-97.
15. Miler, M. (2015). China’s relations with Southeast Asia. Retrieved from https://bit.ly/2XOdYbV
16. Observatory of Economic Complexity. (2016). What does China export? Retrieved from https://bit.ly/35xOXUS
17. Organisation for Economic Co-operation and Development (OECD). (2019). OECD economic surveys China (Tech. Rep.). Organisation for Economic Co-operation and Development, Paris, France. Retrieved from https://bit.ly/2OK7c2G
18. Shu, C., He, D., & Cheng, X. (2015). One currency, two markets: The Renminbi’s growing influence in Asia-Pacific. China Economic Review, 33, 163–178. doi:https://doi.org/10.2139/ssrn.2438641
19. Subacchi, P., Huang, H., & House, C. (2012). China’s double act: How the financial reform and the RMB strategy are linked together. London, UK: Chatham House.
20. Trading Economics. (2019). China Shanghai composite stock market index. Retrieved from https://bit.ly/2QXlKyv
21. UN Comtrade. (2016). Export. Retrieved from https://bit.ly/2OQkEC6
22. World Integrated Trade Solution. (2019). Export. Retrieved from https://bit.ly/33qgo1A
23. World Trade Organization. (2017). World trade statistical review 2017 (Tech. Rep.). World Trade Organization, Geneva, Switzerland.
24. Xu, Z. (2017). How internationalization of the Renminbi contributes to growing spillovers from China to the Association of Southeast Asian Nations (ASEAN) economies (Bachelor thesis). New York University Shanghai, Shanghai, China.
25. Yao, A., & Pang, J. (2015). AXA IM: RMB: Assessing the chance and impact of SDR inclusion. Retrieved from https://bit.ly/2DmXyhf
26. Zhang, M. (2015). Internationalization of the Renminbi: Develpments, problems and influences (Tech. Rep.). Centre for International Governance Innovation, Ontario, Canada. Retrieved from https://bit.ly/2qO7qOl

Wiranto, A. & Yustiana, N. (2019). China’s economic spillover to ASEAN-6 economies: Before and after Renminbi internationalization. International Journal of Business and Administrative Studies, 5(4), 240-256 doi: https://dx.doi.org/10.20469/ijbas.5.10005-4