Asia Pacific News
LAST UPDATE: July 29, 2025
China Social Spending Hits Highest Level in Nearly 2 Decades
The Chinese government has sharply increased social spending—on education, employment and welfare—to its highest share in about 20 years, funded by a record budget deficit, with the aim of boosting household consumption amid tariff pressures.(Bloomberg.com)
Insight
The pivot toward social welfare reflects Beijing’s strategy to shore up domestic demand and shield consumers from external shocks, especially amid trade tensions with the US. It signals a longer‑term fiscal trend prioritising stability over austerity.
PBOC Finds Consumer Mood Is Turning Darker Even as Economy Grows
The People’s Bank of China reports that consumer sentiment regarding income and job prospects is declining, even as the economy continues to grow and retail sales pick up—suggesting gains are uneven.(Bloomberg.com)
Insight
The divergence between growth and sentiment suggests fragile confidence; retail strength may be driven by necessity or policy stimuli rather than genuine consumer optimism. This creates risks if pessimism curbs future demand.
China’s Record‑Breaking Trade Hit First Big Speed Bump Since May
After setting record highs in recent months, China’s trade volumes suffered their worst weekly decline in nearly three months—raising concerns the earlier momentum may be slowing.(Bloomberg.com, Bloomberg.com)
Insight
The slowdown highlights trade volatility and suggests that global demand may be cooling. China’s export-led recovery could face headwinds unless new sources of external growth emerge.
Trump says he is not seeking summit with Xi, but may visit China
Former U.S. President Donald Trump stated he is not pursuing a new summit with China’s Xi Jinping, but may visit China if invited—a gesture he says has been extended by Xi. Talks are ongoing about a possible visit during his Asia trip later this year.(Reuters)
Insight
Trump’s language signals openness to diplomacy without committing to leadership-level talks. The potential visit could serve as a strategic reset amid U.S.–China trade tensions—but remains contingent on Xi’s invitation.
Taiwan Leader Calls Off US Stopover as Trump Seeks Xi Summit
Taiwanese President Lai Ching‑te cancelled a planned stopover in the U.S. after the Trump administration failed to approve the transit. The move comes amid speculation that Trump may visit China, and concerns the transit could complicate trade talks.(Bloomberg.com, news.bloombergtax.com)
Insight
The cancellation reflects the delicate balancing act between U.S.–Taiwan relations and broader U.S.–China diplomacy. It shows how transactional geopolitics can impact routine transit and diplomatic signaling.
Japan says US trade deal eases tariff uncertainties, but risks remain
Japan’s government welcomed a U.S. trade agreement cutting auto and other tariffs to 15%, saying it reduces tariff uncertainty. However, risks remain, including political developments and credit rating concerns tied to Japan’s fiscal health.(Reuters, Reuters)
Insight
While the deal calms immediate tariff fears, Japan remains vulnerable to fiscal and political risks. The agreement may boost business confidence but long‑term structural challenges persist.
Thailand‑Cambodia border calm as military commanders hold talks
After a five‑day border conflict that killed at least 40 people and displaced over 300,000, military commanders from Thailand and Cambodia met at the border and agreed to hold off troop movements, withdraw forces, support returnees and coordinate via liaison teams.(Reuters, Reuters)
Insight
The military talks underscore a fragile ceasefire upheld by diplomatic mediation. While immediate violence subsided, long‑term peace will depend on third‑party monitoring and continued international engagement.
US Needs More Talks With India for Trade Deal, Greer Says
U.S. Trade Representative Jamieson Greer said Washington needs further negotiations with India before a trade agreement can be finalised—since India’s protectionist stance on agriculture and dairy markets makes progress difficult and concessions unlikely ahead of the August 1 deadline.(Bloomberg.com, news.bloombergtax.com)
Insight
The cautious tone reflects strained timelines and structural barriers in U.S.–India trade relations. The prospect of secondary sanctions and unresolved market access issues suggests a deal may be delayed or compromised.
Indonesia Readies Stimulus, Rate Cuts to Ensure 5% Growth
Indonesia is preparing a $1.5 billion fiscal stimulus package—including transport fare discounts, utility price cuts, wage subsidies and social aid—and coordinating further interest rate cuts to support household consumption, investment and infrastructure growth toward its ~5 % GDP target. (フィナンシャル・タイムズ)
Insight
The measures illustrate a proactive policy mix: fiscal stimulus complements a dovish monetary stance to preempt a slowdown. But while short‑term demand may rise, structural weakness in exports and consumer sentiment could limit sustained growth. (フィナンシャル・タイムズ, Reuters)
Indonesia’s FDI drops 6.95% y/y in Q2, biggest fall since 2020
Foreign direct investment into Indonesia fell 6.95 % year‑on‑year in Q2 2025 to IDR 202.2 trillion (~USD 12.3 billion), the sharpest drop since early 2020. Nonetheless, total investment—including domestic capital—reached IDR 477.7 trillion, sustaining over 665,000 jobs. Major FDI sources include Singapore, Hong Kong, and China. (Reuters)
Insight
The FDI decline signals elevated investor caution amid global uncertainty. However, robust domestic investment softens the impact, underscoring the need for Indonesia to attract diversified foreign capital to maintain momentum. (Reuters)
Trump team hears pitches on access to Myanmar’s rare earths
U.S. officials have received pitches to access Myanmar’s substantial rare-earth deposits—mainly controlled by the Kachin Independence Army (KIA)—as part of efforts to reduce reliance on China. Suggestions include negotiating either with the junta or the KIA, though logistics, legitimacy and political risk remain key concerns. (Reuters)
Insight
The proposals reflect strategic urgency in supply‑chain diversification. Engaging with rebel groups or Myanmar’s military highlights the lengths to which the U.S. is willing to go amid escalating tech‑geopolitical tension. (Reuters)
