Asia Pacific News
LAST UPDATE: May 22, 2025
China, ASEAN complete negotiations on upgraded free trade deal
China and the Association of Southeast Asian Nations (ASEAN) have concluded negotiations on the upgraded 3.0 version of their Free Trade Area, aiming to include new sectors such as the digital and green economies. Announced by China’s commerce ministry on Wednesday, the agreement also seeks to enhance supply chain connectivity and deepen integration of production and supply chains. ASEAN, composed of 10 Southeast Asian nations, is currently China’s largest trading partner, with bilateral trade totaling $234 billion in the first quarter of 2025.
Insight
The upgraded trade agreement between China and ASEAN reflects a strategic move to strengthen regional economic ties and resilience amid global trade tensions, particularly with the U.S.
Japan’s Exports to U.S. Fall as Tariffs Start to Bite
In April, Japan’s exports to the U.S. declined by 1.8%, marking the first drop in four months, primarily due to decreased demand for automobiles, steel, and ships.
Insight
The decline underscores the impact of U.S. tariffs on Japanese exports, particularly in key sectors like automotive and steel. This trend may prompt Japan to seek trade negotiations to mitigate tariff effects and explore alternative markets to sustain its export-driven economy.
Tariff Impact Pushing South Korea’s Exports to U.S. to Second Month of Decline
South Korea’s exports to the U.S. fell by 14.6% in the first 20 days of May, following a 2.4% year-on-year decline in overall exports, driven by reduced shipments of autos, auto parts, and steel products.
Insight
The sharp decline highlights the vulnerability of South Korea’s export-dependent economy to U.S. trade policies. The government may need to diversify export markets and invest in domestic industries to cushion against such external shocks.
South Korea vows more policy support, including for drugmakers, as US tariffs weigh
In response to U.S. tariffs, South Korea announced a $20.6 billion support package for key export industries, including biopharmaceuticals and automobiles, aiming to mitigate the economic impact and encourage reshoring investments.
Insight
The substantial aid package reflects South Korea’s proactive approach to shielding its economy from external trade pressures. By bolstering strategic sectors, the country aims to enhance self-reliance and reduce future vulnerabilities to international trade disputes.
Indonesia central bank cuts rates by 25 basis points, as expected
Bank Indonesia reduced its benchmark interest rate by 25 basis points to 5.50%, marking a return to monetary easing to support economic growth amid external pressures like U.S. tariffs.
Insight
The rate cut indicates Indonesia’s commitment to stimulating domestic demand and maintaining currency stability in the face of global trade uncertainties. This move may also signal further monetary policy adjustments if external challenges persist.
Eric Trump Attends Groundbreaking Event for $1.5B Vietnam Resort
Eric Trump participated in the groundbreaking ceremony for a $1.5 billion luxury resort in northern Vietnam, a project by the Trump Organization amid ongoing U.S.-Vietnam trade negotiations.
Insight
The timing of the resort’s development during sensitive trade talks raises questions about potential conflicts of interest and the influence of private business ventures on international diplomacy. It also highlights Vietnam’s strategic importance in the U.S.’s economic and geopolitical considerations in Southeast Asia.
New Zealand’s budget cuts punish public sector, business and workers
New Zealand’s conservative government has implemented significant public sector budget cuts, leading to job losses and economic strain in Wellington.
Insight
The austerity measures, while aiming to maintain fiscal discipline, have resulted in a 4.2% drop in public sector employment and a 6.8% decline in house prices in the capital. Critics warn of long-term economic hollowing-out and talent loss, suggesting that the government’s approach may undermine future growth and public service quality.
