THE IMPACT OF TRADE BETWEEN CHINA ON THE ECONOMIC DEVELOPMENT IN MALAYSIA FROM 1991 TO 2023.
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Universiti Malaysia Sarawak (UNIMAS)
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The study examines the impact of trade between China on the economic development in Malaysia from 1991 to 2023, with a particular emphasis on the connections between GDP, imports, exports, and exchange rate swings. The study uses a variety of econometric methods to assess both short- and long-term dynamics using time series data, such as the Granger causality tests, Johansen cointegration analysis, Vector Error Correction Model (VECM), Phillips-Perron (PP) test, and Augmented Dickey-Fuller (ADF) test. By confirming that all variables are integrated of order one, the unit root tests allow for cointegration analysis. At least one long-term equilibrium link between the variables is revealed by Johansen’s test. It is significant that while China’s exchange rate has a positive and considerable impact on GDP, exports have a negative long-term impact on GDP, indicating structural restrictions in Malaysia’s export mix. China’s currency rate has a major impact on both imports and exports, and exports are found to Granger-cause GDP in the short term. Additionally, imports affect Malaysia’s exchange rate and GDP. These results show that, both in the short and long term, trade and currency dynamics are important factors influencing Malaysia’s economic success. In order to promote sustainable economic growth and strengthen Malaysia’s resilience in international commerce, the report emphasizes the significance of export diversification, currency rate management, and structural reform.