Economic rebalancing has mixed impact on ASEAN

The sectors and products in ASEAN region that will be hit by slower Chinese demand due to economic slowdown are the suppliers of resource-based raw materials. These include chemicals and chemical products, palm oil and rubber for Malaysia, mineral fuels, oils and animal or vegetables fats and oils for Indonesia, organic chemicals, plastics, rubber and electrical machinery and equipment for Thailand; and Singapore's major export items to China liked petrochemicals, processed foods and electronics and electrical products.

However, CIMB Research also pointed out over time, the rebalancing in the China economy towards stronger domestic consumption will offer larger as well as more long-lasting benefits to its ASEAN trading partners, if they are able to successfully expand their direct and indirect access to the Chinese consumer goods markets.

In addition, given the large offering of investment prospects in Malaysia, Thailand and Indonesia, China's commitment towards long-term investment in ASEAN will continue even though direct investment flows from Chinese companies into Asia may be dampened in the short term due to slowdown.