New pattern of East Asian integration: Rise of China and its currency’s role in the regional financial coordination

Authors

  • Assoc. Prof. Dr. Fumitaka Furuoka Visiting Senior Research Fellow Asia-Europe Institute University of Malaya 50603 Kuala Lumpur, Malaysia

Keywords:

Regional integration, China, East Asia, flying geese theory, key currency

Abstract

The rise of China is one of most spectacular events in the global economic and political landscape. More importantly, it can be seen as an emerging of the China-led East Asian regional integration. This paper employs the “flying geese” theory to examine the unique characteristics of emerging new regional integration in East Asia. In this new East Asian regionalism, the Chinese currency is said to become the “key currency” in the region. Thus, this study used several statistical methods to examine the role of Chinese currency in the regional integration. The empirical analysis detected a stable and long-run co-movement between the Chinese Yuan and the Japanese Yen. As a conclusion, the Chinese Yuan has started playing a role of de facto key currency to influence the movement of other regional currencies. These findings could be interpreted as the new pattern of the East Asian regionalism in which the regional momentary and financial coordination would become a main economic policy agenda.

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Published

2021-09-01

How to Cite

Furuoka, F. (2021). New pattern of East Asian integration: Rise of China and its currency’s role in the regional financial coordination. AEI Insights, 1(1), 69–86. Retrieved from https://mjlis.um.edu.my/index.php/AEIINSIGHTS/article/view/31691

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