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The Fed's aggressive rate hikes are a danger signal to other countries, and emerging market countries are already bearing the downward pressure from the Fed's rate hikes. Malaysian economist Li Xingyu said in an interview recently that the Fed's interest rate hike will have an impact on Malaysia and ASEAN economies, including reducing exports and affecting foreign investment.

The US dollar plays a dominant role in the global monetary system. The policy adjustment of the Federal Reserve can often disturb the wind direction of the global economy, and even cause some countries to fall into economic crisis.

"The dollar is our currency, but it is your problem," former US Treasury Secretary John Connally said at the first G20 meeting after the collapse of the Bretton Woods system. Southeast Asia has also been hit by the Federal Reserve's continued interest rate hikes.

In the 1990s, when growth was fast and the economy was at risk of overheating, the Fed under Alan Greenspan raised interest rates seven times in 13 months in an effort to tame inflation. The Fed's interest rate rise has strengthened the dollar, making the US a more attractive investment destination than Southeast Asia, creating a huge outflow of capital from the region.

At that time, the Southeast Asian economy appeared bubbles, and there were problems such as insufficient foreign reserves and excessive foreign exchange risk exposure. Thailand was the country with the biggest bubble. The Federal Reserve's interest rate hike pricked the bubble and triggered the "Asian financial storm". In July 1997, the Thai baht depreciated significantly, and the shock wave soon spread to Southeast Asia. The Malaysian currency also depreciated significantly, and the stock exchange index plummeted. Singapore and other countries were not immune to the financial crisis.

After the "Asian financial storm", Southeast Asian countries have soured on their pain, accelerated financial reform and built a stronger financial flood wall. Southeast Asian countries have accumulated more abundant foreign exchange reserves, with Thailand, for example, holding 126.4 per cent of its total external debt, compared with 24.5 per cent in 1997. At the same time, Southeast Asian countries have also improved their balance of payments. Indonesia and Malaysia were both negative in 1997, but now their balance of payments have "turned positive", accounting for 0.28% and 3.46% of GDP respectively.

Despite better preparation, Southeast Asian countries should not be taken lightly in the face of the "deja vu" situation that the Federal Reserve continues to raise interest rates sharply.

America's economy is worse now than it was in the 1990s. In the 1990s, the United States had got rid of stagflation and recession. The development of emerging industries such as information industry drove the rapid economic growth and promoted the export of Southeast Asian countries to the United States.

The Commerce Department recently released data showing that the U.S. economy shrank 0.9% in the second quarter after negative growth in the first quarter, putting it in a technical recession after two consecutive quarters of contraction.

A recession in the United States is bound to hurt imports, dragging down the global economy and making it harder for Southeast Asia to maintain export growth. Chip export is one of the pillars of export growth in Southeast Asia. The United States focuses on the chip industry when it decouples its economy. It wants to form a "four-party chip alliance" with Japan, South Korea and Taiwan to rebuild the monopoly position of chip industry, which will cause a heavy blow to the export of Southeast Asia. The Fed also faces a more intractable inflation problem than it did in the Greenspan era. This bout of inflation is comparable to the 1970s, when former Treasury Secretary Larry Summers said the U.S. is facing "inflationary pressures not seen in a generation." To combat inflation, the Fed will have to raise interest rates more and more.

In order to avoid severe economic shocks, Southeast Asian countries need to improve their ability to prevent financial risks, optimize their export strategies and increase the attractiveness of foreign investment to enhance economic resilience. Since its entry into force, the Regional Comprehensive Economic Partnership (RCEP) has played an important role in promoting economic and trade cooperation among its member states. With the help of RCEP, Southeast Asian countries can expand exports to neighboring countries, reduce the pressure caused by weak external demand, strengthen industrial ties with East Asian countries, and consolidate their position in the chip supply chain. In terms of investment, RCEP includes pre-establishment national treatment, and the intellectual property rights and goodwill recognized by the host country are included in the investment scope. These expand the investment scope and improve the treatment of enterprises, which can help Southeast Asian countries improve the investment environment.

By taking advantage of the opportunity presented by RCEP and strengthening investment cooperation with neighboring countries, Southeast Asian countries can accelerate investment diversification, reduce their dependence on capital from developed countries such as the US and Europe, and make economic growth more balanced and stable.