China Research

A discussion forum on emerging markets, mainly China – from a macro, micro, institutional and corporate angle.

Trump’s tariffs weaken Asian growth

October 3, 2025

It is not a new analytical conclusion that the absurd tariffs of President Trump also damage emerging markets though with different intensity from country to country. This harming American policy certainly also affects Asian countries which recently has been confirmed by the updated forecast of the Asian Development Bank (ADB). The weakening outlook for the Asian member countries of the ADB also means a limited setback for Western corporations in their attempt to diversify their export markets as a reaction on the deteriorating conditions on U.S. markets. However, Asian growth performance will remain superior to the rest of the world.

Negative growth effects from tariffs but partly offset by domestic policy

ADB summarizes its revised forecast from September 2025 as follows: “Developing Asia’s growth forecasts are trimmed to 4.8% in 2025 and 4.5% in 2026, down by 0.1 and 0.2 percentage points from April. The revisions reflect offsetting factors. The updated trade agreements and tariffs led to a broad shift toward higher US tariffs, which will weigh on the region’s exports and growth. However, fiscal and monetary policy responses are expected to cushion the impact…” (see https://www.adb.org/outlook/editions/september-2025).

It also should be observed that China still has not achieved a deal with the Trump administration. This means a major shortcoming or uncertainty in the ADB forecast -despite the fact that many Asian countries indeed have a trade agreement with the U.S. since August 1. But who knows which trade deal can be regarded as stable?

As far as China is concerned, the ADB explains that GDP forecasts for the People’s Republic of China (PRC) have been kept unchanged due to domestic growth support. At the same time, the ADB still mentions concerns about China’s “continued weakness in the property market”. My own interpretation of the ADB view on the PRC means continuing concerns, reflected by the decelerating GDP-growth forecasts for 2025 and 2026 (4.7 and 4.3 percent).

India has to accept some downward revision of its growth as well but remains the fastest (major) economy in Asia (expected GDP growth: 6.5 percent in both 2025 and 2026).

Unfortunately, South East Asia will have to face the most negative growth impact in 2026 from Trump’s trade restrictions. Indonesia (GDP +5.0 in the September forecast for 2026, down from +5.1 percent in April)is still considered to remain on track – but countries such as the Philippines (to +5.7 from +6.1 percent), Thailand (to +1.6 from +2.9 percent), Vietnam (to +6.0 from +6.5 percent) and Malaysia (to +4.2 from 4.8 percent) lose quite some momentum – mainly due to American tariffs.

Conclusion: American protectionism certainly affects Asia negatively as a whole – but certain countries more than others. However, altogether Asia will most probably remain the fastest growing region or continent also in the future – as a message to the corporate sector, at least as long as China can avoid a (financial) meltdown.

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University

Russia’s (almost) unobserved economy

September 16, 2025

Russia is causing these days – for well-known reasons – almost no headlines or analysis on its pure economic development in Western analysis. An exemption is the important work done by BOFIT in Helsinki which is an organization that still provides the world with updated analysis on the Russian economy. 

Obvious – and logical – economic slowdown 

According to BOFIT (The Bank of Finland Institute for Emerging Economies), Russian economic growth remained slow also in July – but still the term “growth” is used in their latest report, and not the expression of a recession (https://www.bofit.fi/en/monitoring/weekly/2025/vw202537_1/ ). However, according to other judgments, Russia could now be on the edge of a recession or already slightly in it – an interpretation that recently partly has been rejected, for example, by the Russian central bank CBR (https://www.reuters.com/markets/europe/russian-central-bank-cautiously-cuts-key-rate-by-100-bps-17-2025-09-12/ and https://www.express.co.uk/news/world/2108234/russia-economy-meltdown-central-bank-gdp-tanking).

Anyway, the Russian economy looks very much like stagnating these days, reflecting a deterioration from previous more positive growth numbers (Q2:+1.1%; Q1:1.4% yoy, but down by 0,6% in the course of the first half of 2025 according to Reuters and the CBR).  

Interestingly, existing sluggish economic growth is mainly referred to still existing high interest rates as the main medicine against very high inflation and their negative impact on non-military investment. Poor economic results for many Russian companies also had – and probably still have – a negative impact on investment plans. On the other hand, government spending continues to grow and will do so in the future.

Altogether, the non-military part of the Russian economy has more recently – according to BOFIT – mainly been driven by private consumption. This is obviously confirmed by statistical numbers for retail sales and services – a development that is to some extent supported by relatively low unemployment.

Measured from the production side it can be summarized that industrial production remains more or less stagnating with rising production of commodities and shrinking output of quite some manufacturing goods – but with positive numbers for certain manufactured products such as transport and electronic equipment.

Summary: When studying forecasts on the Russian GDP, stagnation or in the best case only a very weak increase seems to be on the cards for 2025, indicating some further weakening in the forthcoming quarters and probably no visibly improved performance next year. But uncertainty – also statistical? – remains high in 2026.

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University

SCO – another example of Chinese long-term strategy

September 3, 2025

The Shanghai Cooperation Organisation (SCO) belongs to the international conventions that are hardly known in our part of the world. Though having been founded already in 2001, not very much has been reported from the 24 Heads of State Council meetings before the 25th SCO convention that took place recently in Tinjian.  The SCO Tianjin Summit 2025 has probably been the most important of its kind so far, due to the list of prominent participants and the burning international conflicts.

Long-term aspects more important than short-term results

Shanghai Cooperation Organization (SCO), is an intergovernmental organization that has been started in 2001 by China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan aiming at peace and cooperation among its member states with the intention to promote what then was called a new fair political and economic order. Later on, also India, Pakistan and Iran joined the organization.

Totally, the SCO also includes quite a number of observer states from the Eurasian region. Around half of the global population is represented in the SCO which considers itself as an alternative to corresponding Western organizations .

According to the SCO, its main goals are defined as follows:

#  “to strengthen mutual trust, friendship and good-neighborliness between the Member States;

#  to encourage the effective cooperation between the Member States in such spheres as politics, trade, economy, science and technology, culture, education, energy, transport, tourism, environmental protection, etc;

#  to jointly ensure and maintain peace, security and stability in the region; and

# to promote a new democratic, fair and rational international political and economic international order”.

When reading these points above, one can easily observe their general and unbinding character – whatever this may mean. But now more co-operation among the member countries seems to be strived. This would allow China – the strongest member of the SCO – to pave the way for the continued development of the SCO (see https://www.chinadailyhk.com/hk/article/618965), certainly in line with its international long-term strategy. A parallel long-term strategy of this kind is also visible in other parts of the globe, for example in Africa, South America and the Pacific area. Russia’s role in the SCO seems to remain limited compared to China’s dominant position. India’s future impact on the SCO still appears unclear but closer relations to China seem to be on the cards. Trump’s tariffs could favor such a development even more than so far.    

Conclusion: China’s interest in the future of the SCO underlines again its long-term ambitions in the world – for reasons of political influence, new markets for its exports and the future supply with important commodities. By looking somewhat deeper into the SCO, we have got another example of China’s unique capacity to apply both short-term and long-term perspectives at the same time. A phenomenon that uses to come back regularly and that often is neglected in Western countries and companies..

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University