The economic landscape in Asia is bracing for a pivotal week as high-level US-China trade talks, key central bank decisions, and crucial GDP releases converge, all against a backdrop of shifting trade flows and evolving regional partnerships. As the world’s two largest economies prepare for potentially breakthrough negotiations, neighboring countries like Japan, South Korea, Taiwan, and Thailand are navigating their own economic challenges and opportunities, with ripple effects likely to be felt across the region.
All eyes are on the US-China trade talks set to begin this weekend in Malaysia. According to ING, Vice Premier He Lifeng and US Treasury Secretary Scott Bessent will lead these high-stakes discussions, which many hope will pave the way for an in-person summit between Chinese President Xi Jinping and former US President Donald Trump in South Korea on October 30. This would be the first face-to-face meeting between the two leaders since the G20 summit in Osaka back in 2019. The stakes are high: after years of tit-for-tat tariffs, threats, and uneasy truces, any sign of progress could have far-reaching consequences for global supply chains and market sentiment.
President Trump, for his part, has offered a mix of optimism and caution. He’s spoken of a “fantastic deal” with China and even floated the idea of visiting China in early 2026. Yet, he’s also hedged his bets, warning that the much-anticipated meeting might not happen at all. “We are leaning toward a positive outcome that at least extends, if not builds on, the uneasy trade truce of the past few months,” ING analysts noted. However, they also emphasized that the summit is contingent on a framework being hammered out during the Malaysia talks—meaning there’s still plenty of room for last-minute drama.
Meanwhile, China is set to release its manufacturing purchasing managers’ index (PMI) on October 31. Expectations are for the PMI to remain in contraction territory, with a reading of 49.6 for October, signaling ongoing challenges in the manufacturing sector. This comes as Chinese policymakers juggle the need to stimulate domestic demand while managing external pressures from tariffs and shifting global demand.
Japan, too, faces a delicate balancing act. The Bank of Japan (BoJ) is widely expected to keep its policy rate steady at 0.5% during its meeting on October 30. Despite divisions among BoJ board members, the consensus remains cautious, with most wary of tightening policy too quickly. Tokyo’s inflation rate is projected to rise by 2.5% year-on-year in October, and there are signs that industrial production and retail sales are bouncing back. ING points out that Japan’s economy has shown resilience, even as US tariffs and a weakening yen have created headwinds.
But the yen’s weakness is a double-edged sword, especially for Japan’s trading partners. Thailand, for instance, is pushing forward with exports to Japan in the final stretch of 2024, focusing on sectors like food, games, and the wildly popular Y Series entertainment. According to The Nation Thailand, trade between the two countries reached US$52.01 billion in 2024, with Thai exports totaling US$23.29 billion and imports at US$28.73 billion. This left Thailand with a trade deficit of US$4.18 billion in just the first eight months of the year.
Despite Japan’s economic slowdown and the yen’s depreciation—which has squeezed Japanese consumers and dampened purchasing power—Thai exports have remained robust. Chanthapat Panjamanond, Thailand’s Commercial Counsellor in Tokyo, explained that the weaker yen has made foreign goods more affordable for Japanese buyers, helping to offset some of the challenges. For 2025, Thailand is targeting a 2% growth in exports to Japan, aiming to add over 10 billion baht to last year’s total. In 2024 alone, Thailand exported approximately 1.5 billion baht in games and 1 billion baht in Y Series entertainment to Japan, underscoring the growing cultural and commercial ties between the two nations.
Still, not all is smooth sailing. Thailand’s trade deficit with Japan is partly a result of Japanese companies setting up production bases in Thailand—particularly car manufacturers who import essential parts for vehicles built both for local consumption and export. If Japan’s own car exports, especially to the US, remain strong, there’s potential for a boost in Thailand’s automotive exports to Japan as well.
However, new trade dynamics are emerging. A recent US-Japan tax agreement has reduced Japan’s tariff on American goods from 24% to 15%, which could put pressure on Thai rice exporters. Japan has also agreed to import 770,000 tons of US rice annually under a World Trade Organization quota, raising concerns that Thailand might lose some of its rice market share. Despite this, demand for jasmine rice—a Thai specialty—remains strong, and the Thai Ministry of Commerce is keeping a close watch to ensure continued access to the Japanese market.
Elsewhere in the region, South Korea is poised to release its third-quarter GDP figures. The Bank of Korea expects growth to accelerate, with a projected 1.2% quarter-on-quarter increase. Factors driving this momentum include government cash handouts, a robust equity rally, and a rebound in equipment investment, especially in the IT sector. While construction activity continues to slow, strong semiconductor exports are expected to provide a significant lift, even as soft energy prices weigh on imports.
Taiwan, another export powerhouse, will publish its third-quarter GDP on October 31. Growth is expected to slow to 5.9% year-on-year, down from a rapid 8.0% in the previous quarter. Nevertheless, Taiwan’s export-led economy remains resilient, with strong order growth suggesting that US tariffs have yet to significantly dent demand. Markets have responded by revising up their 2025 GDP growth forecasts for Taiwan—from a modest 2.8% at the start of the year to 5.0% by mid-October. If the third-quarter data come in solid, expectations could rise even further, potentially converging on ING’s 5.7% forecast.
As Asia’s economic heavyweights navigate a complex web of trade negotiations, currency fluctuations, and shifting consumer trends, the week ahead promises to be anything but dull. Whether the US-China summit delivers a breakthrough or not, the region’s economies are clearly adapting—sometimes in surprising ways—to the new realities of global commerce. For now, the world watches and waits, eager to see which way the winds of trade will blow next.
