Interdependence of income between China and ASEAN‐5 countries
| Pages | 148-161 |
| Date | 06 June 2008 |
| DOI | https://doi.org/10.1108/17544400810884718 |
| Published date | 06 June 2008 |
| Author | Evan Lau,Koon Po Lee |
| Subject Matter | Economics |
Interdependence of income
between China and ASEAN-5
countries
Evan Lau
Department of Economics, Faculty of Economics and Business,
Universiti Malaysia Sarawak (UNIMAS), Sarawak, Malaysia, and
Koon Po Lee
UMW Corporation Sdn Bhd (Oil and Gas), Kuala Lumpur, Malaysia
Abstract
Purpose – The purpose of the paper is to empirically examine the interdependence of income
between China and ASEAN-5 countries by using the real gross domestic product (GDP). Besides
answering this important policy question, the paper is also concerned with ascertaining the causal
direction between China and the ASEAN-5 income.
Design/methodology/approach – The paper resorts to the standard time series econometrics
analysis. These includes the unit root, cointegration and the Granger causality tests in order to test the
causal interplay and interdependence of income between ASEAN-5 and China for the estimation
period from 1960 to 2003 obtained from the Penn World Table (PWT) 6.2.
Findings – Empirical results are found to support the strong interdependence of income between
China and ASEAN-5 countries. Further, the causality experiment suggests that China is the key factor
in connecting (equilibrium point) the ASEAN-5 region, where China in one-way or another marks the
resemblance of the income amongst these economies.
Originality/value – The paper is of value in that it highlights the issue of interdependence of income
especially in developing countries. With the increasing interest of economic integration around the
globe especially the China-ASEAN Free Trade Area (CAFTA), the interdependence and
synchronization movements of income between member countries is an important characteristic for
suitability towards the regional common currency goal.
Keywords China, South East Asia,Free trade, Income, Internationalcooperation
Paper type Research paper
1. Introduction
The rapid development of the People’s Republic of China has drawn much attention in
recent years. Being prosperous and holding pride as the second largest world economy
(after the USA) in recent years, its gross domestic product (GDP) stood at USD10.21
trillion in 2006[1]. There had been annual consistent high growth rate averaging above
10 percent in China for the past decade and this had significantly caused an outburst
upon the world economies. This is particularly true especially among its neighboring
regional economies of the ASEAN-5 (Indonesia, Malaysia, Philippines, Indonesia and
The current issue and full text archive of this journal is available at
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A shorter version of this paper was presented at the Regions on a Global Platform 9th PRSCO,
Summer Institute, Kuala Lumpur, Malaysia in July 2006. Comments from the Conference
participants provided insights that led to the improvement of the paper. The authors would like
to thank Professor Junjie Hong (the Executive Editor of this journal) and the two anonymous
referees for their helpful comments and suggestions on the earlier draft. As usual, the
responsibility for errors and omissions rests with the authors.
JCEFTS
1,2
148
Journal of Chinese Economic and
Foreign Trade Studies
Vol. 1 No. 2, 2008
pp. 148-161
qEmerald Group Publishing Limited
1753-4408
DOI 10.1108/17544400810884718
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