Asia Pacific News
LAST UPDATE: July 7, 2025
China says BRICS not seeking ‘confrontation’ after Trump tariff threat
China’s Foreign Ministry responded to Donald Trump’s threat of new 10% tariffs on nations aligned with BRICS, saying the bloc is not seeking confrontation. Spokesperson Mao Ning stressed that “trade and tariff wars have no winners” and protectionism is a dead end.
Insight
China is taking a conciliatory tone to defuse tensions, aiming to prevent trade escalation. The strategy portrays BRICS as committed to multilateralism, not anti‑Western blocs, countering U.S. pressure.
China reroutes exports via south-east Asia in bid to dodge Trump’s tariffs
Chinese exporters are increasingly redirecting goods through Southeast Asia to bypass U.S. tariffs. In May 2025, direct shipments to the U.S. dropped by 43% (~$15 bn), while exports to SEA and the EU rose by 15% and 12%. Vietnam saw a 30% surge and Indonesia 25%.
Insight
The shift reveals China’s supply chain agility and highlights loopholes in tariff regimes. The U.S. is responding with a 40% transshipment tariff in deals with Vietnam to blunt the tactic.
Calls grow for China’s household sector to be bigger economic driver
Advisers are urging Beijing to lift household consumption’s share of GDP from ~40% toward OECD average (~54%) by 2035. Proposed measures include welfare expansion, tax reform, passport system overhaul, pension/property market support.
Insight
The shift signals China’s intent to rebalance from export/investment-led growth toward domestic demand, essential in a deflationary, trade‑tense environment. Yet redistributing resources could slow overall growth.
Japan PM says won’t ‘easily compromise’ to Trump on tariffs
PM Shigeru Ishiba publicly resisted Trump’s bid to impose tariffs of up to 35% on Japanese goods, stating Tokyo will not “easily compromise” in negotiations and must be treated differently given its U.S. investment role.
Insight
Japan is adopting a tougher stance, banking on its economic interdependence with the U.S. to fend off protectionism. This may harden U.S.–Japan trade talks ahead of a looming negotiating deadline.
Japan’s Real Wages Fall Most Since 2023 in Headache for Ishiba
Japan recorded its sharpest real wage decline since 2023, with inflation outpacing nominal wage gains. This drop is a major challenge for PM Ishiba, undermining consumer spending and complicating his economic agenda.
Insight
The wage squeeze dampens domestic demand and threatens the political standing of Ishiba’s administration. Reviving real incomes will require strong policy measures, but persistent inflation could constrain them.
South Korea presidential adviser heads to Washington ahead of tariffs deadline
South Korea’s presidential national security adviser Wi Sung-lac flew to Washington on July 6–8 to push for extending a 90-day U.S. tariff pause expiring July 9. Discussions will also involve defense and alliance ties.
Insight
By combining trade diplomacy with security talks, Seoul is reinforcing its broader strategic value to Washington. The mission underscores its priority to avoid punitive tariffs via leveraging the bilateral alliance.
Indonesia’s top negotiator to visit U.S. on Monday ahead of tariff deadline, official says
Indonesia’s senior economic minister, Airlangga Hartarto, planned a U.S. visit on Monday July 7 for tariff talks ahead of the July 9 deadline. Facing a potential 32 % U.S. tariff, Jakarta offered to slash its tariffs on U.S. goods, boost imports of wheat and aircraft, and invite U.S. investment in critical minerals. A $34 bn trade deal involving Garuda and Indofood was set to be signed. Jakarta revised its 2025 GDP target downward to 4.7–5.0 % due to possible tariff impact. (reuters.com, reuters.com)
Insight
Indonesia is deploying a multi-pronged strategy — tariff cuts, large import deals, investment incentives — to head off steep U.S. tariffs. The broad $34 bn pact signals serious commitment and attempts to rebalance the long-standing trade surplus.
Thailand submits new trade proposal offering zero tariffs on many US goods
Thailand submitted a revised trade proposal to the U.S. on July 7, offering zero tariffs on many American imports, increasing purchases such as LNG, corn, and aviation equipment, and aiming to balance trade within 10 years.
Insight
The updated offer demonstrates Thailand’s responsiveness to U.S. feedback and willingness to liberalize trade significantly. It’s a calculated diplomatic move to avert the 36 % tariff while maintaining export growth.
Thai Budget Bill, Spending to Move as Planned, Minister Says
On July 6, Finance Minister Pichai Chunhavajira confirmed that Thailand will inject an extra 48 billion baht (about US $1.5 billion) into the economy during the last three months of the current fiscal year. The planned 3.78 trillion baht (approx. US $115 billion) budget for the year starting October 1 is expected to pass Parliament by end‑August.
Insight
Despite ongoing political turmoil—including a coalition shake-up and looming U.S. tariff threats—Thailand is staying the course on fiscal stimulus. The additional funding aims to cushion the economy as tariff concerns and leadership instability persist.
Thailand’s Consumer Prices Declined in June
Thailand’s headline CPI fell 0.25 % year-on-year in June—marking the third consecutive month of deflation—driven by lower energy and food prices. Core inflation, excluding volatile items, was 1.06 %.
Insight
The persistent dip in prices supports arguments for continued accommodative monetary policy. With deflationary trends, the Bank of Thailand has room to maintain interest rates at 1.75 % to foster economic growth.
US withdrawal leaves energy transition funding gap in south-east Asia
The US pulled out of the Just Energy Transition Partnership (JETP), a $45 billion climate financing initiative. Southeast Asia consumes ~5 % of global energy but attracts only 2 % of clean‑energy investment. Nations like Indonesia and Vietnam aim for net‑zero by 2050 but rely heavily on coal. They will need $190 billion annually by 2030—five times current investment—to meet climate goals. The US exit shifts pressure onto private investors and domestic policy reform.
Insight
The US withdrawal has created a funding void, pushing Southeast Asian governments to attract private capital and implement regulatory reforms. Germany’s continued funding shows allies can fill some gaps, but systemic market and subsidy issues remain key barriers.
