Asia Pacific News
LAST UPDATE: June 26, 2025
China’s collateral demands curbing emerging countries’ ability to manage finances, study shows
A study by AidData, Kiel Institute, and Georgetown University found China lent $911 b to low- and middle-income countries (2000–2021), with nearly half secured via cash deposits in Chinese banks. These escrow mechanisms limit borrowers’ fiscal flexibility and complicate debt restructuring (marketscreener.com, reuters.com).
Insight
China’s practice of revenue ring-fencing through collateralized loans gains leverage over borrower nations by restricting fiscal control. This approach may backfire, increasing debt distress and complicating future lending for Beijing.
China takes action on key US fentanyl demands
China will add two key fentanyl precursor chemicals to controlled list from July 20, following talks between Ambassador Perdue and Minister Wang. The move may lead to lifting 20% U.S. tariffs. China also reported seizures of 2.42 t of drugs and over 1,300 prosecutions this year .
Insight
The step demonstrates China’s strategic balancing act—framing the export controls as UN-aligned yet responding to U.S. pressure. It may serve as leverage in broader trade discussions.
US businesses shy about attendance at China’s Davos
High-profile American firms are limiting exposure at the China Development Forum, avoiding headline meetings amid geopolitical scrutiny post-zero-COVID era .
Insight
The retreat of U.S. corporations from China’s flagship economic summit reveals how political risks are shaping corporate diplomacy. It illustrates a delicate balancing act between market opportunities and domestic scrutiny.
Japan Can’t Accept US’s 25% Car Tariffs, Akazawa Reiterates
Trade negotiator Akazawa reaffirmed Japan’s strong objection to proposed 25% U.S. auto tariffs, citing Japan’s large U.S. automotive investment and production. Ministry underscores the July 9 pause is non‑binding .
Insight
Japan is emphasizing its local economic contribution to avoid punitive tariffs. However, the looming July 9 deadline increases pressure to reach broader concessions in trade, agriculture, and security.
Tokyo’s Rising Rents Show Inflation Cycle Deepening for BOJ
Tokyo’s apartment rents are increasing at the fastest rate in 30 years, signaling sustained second-round inflation that may force the Bank of Japan to extend rate hikes .
Insight
This sharp rise in housing costs marks a shift from externally driven price pressures to domestically rooted inflation—potentially locking in the BOJ’s tightening path.
South Korea’s Lee urges approval of $22.5 bn extra budget
President Lee Jae‑Myung called on the National Assembly to fast‑track a supplementary 30.5 trillion won (~$22.5 bn) budget aimed at boosting the economy, including universal consumption coupons amid slowing growth and rising consumer prices. Lee framed the move as essential to offset U.S. auto tariffs initially set at 25% and later paused until July.
Insight
Lee is leveraging direct cash support to households and businesses to stimulate domestic demand while navigating external headwinds, particularly trade frictions with the U.S. The swift execution of fiscal stimulus reflects the urgency to stabilize South Korea’s export‑driven economy.
Philippines Cuts 2025 GDP Growth Goal, Trims Inflation View
The Philippine government lowered its 2025 GDP growth forecast to 5.5%–6.5% (from 6%–8%) due to global uncertainties. Inflation outlook for 2025 was revised to 2%–3%, and the fiscal deficit is expected to widen. The central bank has already cut interest rates twice to support growth.
Insight
The downward revision reflects global economic risks, prompting the BSP to shift towards a more dovish stance. Lowering inflation projections indicates confidence in policy transmission, but raises questions about sustaining momentum amid geopolitical volatility.
Indonesia taps online marketplaces to boost tax collection
Indonesia plans to mandate e-commerce platforms (TikTok Shop, Tokopedia, Shopee, Lazada, etc.) to withhold and remit 0.5% of sellers’ sales to tax authorities. The rule, aimed at curbing the shadow economy, may launch as early as next month, though concerns remain about implementation readiness.
Insight
This action marks a shift to modernize tax systems and widen the tax base in the digital economy. While technically challenging, it signals Indonesia’s determination to integrate informal online sellers into formal taxation despite vendor pushback.
Amnesty says Cambodia is enabling brutal scam industry
Amnesty International reported that Cambodia hosts at least 53 scam centers, including for trafficked children, operating under inhumane conditions with torture, electric shocks, and forced “pig-butchering” romance scams. The industry generates over $12.5 bn annually (~50% of GDP). Authorities deny negligence.
Insight
The findings point to systemic governance failure, as state institutions appear complicit or inert, undermining victim protection. With the scam economy deeply embedded, true remediation will require structural reforms, international cooperation, and law enforcement overhaul.
