Asia Pacific News
LAST UPDATE: August 2, 2025
Asia Manufacturing Outlook Marks Five‑Year Low as Tariff Concerns Linger
Sentiment among Southeast Asian manufacturers has dropped to its lowest point in five years, with confidence slipping as U.S. tariff uncertainty undermines business planning (The Straits Times, The Business of Fashion, ウォール・ストリート・ジャーナル)
Insight
Manufacturers across Asia are increasingly wary of escalating trade barriers, suggesting that even short‑term tariff policy shifts by the U.S. can erode business sentiment and dampen investment intentions in the region. This points to broader fragility in the global manufacturing network if protectionist measures persist.
Japan’s factory activity slips back into decline in July, PMI shows
Japan’s manufacturing PMI fell to 48.9 in July from 50.1 in June, returning to contraction territory. Weak demand led to sharp output decline and new orders fell. Job creation slowed, input cost inflation eased, but output prices rose. Business confidence reached six‑month high, supported by expectations of stronger demand and trade‑uncertainty easing via a new Japan–U.S. trade agreement reducing tariffs (Reuters)
Insight
The manufacturing sector remains vulnerable to external trade dynamics; although firms are cautiously optimistic, recovery hinges on resilient demand and tariff stability under the new Japan‑U.S. tariff-only reduction framework.
South Korea’s Exports Accelerate, Fueled by Chip Demand
In July 2025, exports increased 5.9% year-on-year to $60.8 billion, beating forecasts. Semiconductor exports surged 39.3%, the strongest since Oct 2024. Automobiles rose 8.8%, ships surged 107.6%. This was partly driven by pre‑emptive shipments ahead of U.S. tariffs that began Aug 1. Trade surplus narrowed to $6.6 billion (Reuters, ウォール・ストリート・ジャーナル, マネーUSニュース)
Insight
South Korea’s export resilience underscores its global leadership in semiconductors and high-tech hardware, which helps buffer the impact of U.S. tariff shocks. However, trade timing tactics may mask underlying demand shifts and expose vulnerabilities to abrupt policy moves.
India Says Russia Ties ‘Time‑Tested’ as Trump Slams Relationship
India’s foreign ministry reaffirmed its “steady and time‑tested” strategic partnership with Russia, in response to U.S. President Trump’s criticism. Trump imposed a 25% tariff on Indian exports and threatened punitive actions over New Delhi’s military and energy ties to Russia (Bloomberg.com, Ground News, news.bloombergtax.com)
Insight
New Delhi is asserting sovereign policy autonomy, signaling that geopolitical alignment with traditional partners is non‑negotiable despite U.S. pressure. This stance complicates the possibility of a comprehensive U.S.–India trade deal and points to deeper realignments driven by energy security and strategic autonomy.
Philippines’ Marcos Eyes India Trade, Defense in Talks With Modi
Philippine President Ferdinand Marcos Jr. will visit India during Aug 4–8 to discuss trade and defense cooperation with PM Modi, recognizing India’s strategic and economic significance. Talks will also include broader regional and international matters (Bloomberg.com, Reddit)
Insight
Manila’s outreach to New Delhi reflects expanding Southeast Asian diversification away from traditional partners. Strengthening defense and trade links with India could mark a shift in regional alignment patterns, offering mutual leverage in Indo‑Pacific dynamics.
China’s central bank sets up new financial stability committee
The People’s Bank of China has created a new macroprudential / financial stability committee to monitor and address systemic risks. It pledges to maintain an “appropriately loose” monetary stance, ensuring liquidity, supporting trade‑linked firms, keeping yuan exchange rate flexible, and cautiously promoting yuan internationalization (Reuters, TradingView, マネーUSニュース)
Insight
Beijing is proactively tightening financial oversight amid increasing debt and risk in state‑linked entities. At the same time, it balances this with continued stimulus and exchange‑rate flexibility to anchor export growth and forestall market volatility.
China warns against protectionism as Trump unveils widespread tariffs
China has publicly rebuked U.S. protectionist trade moves, warning that widespread new tariffs will harm global trade and economic stability. The remarks came in response to President Trump’s announcements of sweeping import duties affecting many countries (South China Morning Post, NAMPA)
Insight
Beijing’s rhetoric underscores its concern over escalating U.S. trade barriers and signals willingness to fight back diplomatically or via retaliatory measures. It also suggests China is positioning itself as advocate for a rules-based trade system amid rising unilateralism.
China central bank to keep appropriately loose monetary policy, support exporters
The PBOC restated its commitment to a flexible, accommodative monetary policy in the second half of 2025. It intends to focus on supporting exporters and trade‑related enterprises, while closely managing interest rate tools and liquidity (TradingView, Reuters)
Insight
Monetary policy in China is calibrated to avoid deflationary pressures while cushioning trade‑exposed sectors. The shift indicates concern over slowing global demand and a desire to preserve China’s export competitiveness through policy support.
Trump Should Get Nobel Peace Prize for Brokering Cease‑Fire Deal, Cambodian Deputy PM Says — WSJ
Cambodia’s Deputy Prime Minister Sun Chanthol has proposed nominating former President Trump for the Nobel Peace Prize, attributing his facilitation of a cease‑fire in the Cambodia‑Thailand border conflict to his personal engagement. The cease‑fire followed threats of high reciprocal tariffs, eventually reduced, and negotiations in Malaysia. (ウォール・ストリート・ジャーナル, nypost.com)
Insight
Countries like Cambodia are using trade diplomacy incentives and public recognition to encourage favorable U.S. policy outcomes. This reflects a growing tactic where economic levers like tariffs are employed in geopolitical negotiation—even to the extent of influencing peace processes.
