Investors seeking an answer to the question have some new figures to mull over. China's increasing trade and financial heft has ramped up correlations in equity and currency markets in Asia in recent years, challenging diversification strategies for investors as new — and increasingly complex — feedback loops emerge. Two recent studies reveal just how Chinese-driven other Asian markets have now become — a reminder of the region's vulnerability if market fears over China's economic footing re-emerge. On Monday, a report from the Bank for International Settlements (BIS) — which its authors say is the first attempt to systematically examine China's impact on Asian financial markets through regression models — concluded that the country's influence on regional equity markets has risen to a level close to that of the U.S. in non-stress periods. The study, written by Chang Shu, Dong He, Jinyue Dong and Honglin Wang, found that the yuan's exchange rate relative to the U.S. dollar also increasingly drives the outlook for regional currencies.

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