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China is launching a major push to build a unified national market, a strategic pivot designed to unleash domestic consumption and power its next phase of growth, a top economic official announced.

Speaking at an Asia-Pacific Economic Cooperation (APEC) meeting in Shanghai, Vice Finance Minister Liao Min outlined the country's plan to shift toward new, demand-driven growth drivers. This move comes as economies across Asia navigate a "pivotal juncture" in the global economic landscape.

"We are pressing ahead with building a unified market to further unleash domestic demand and consumption potential," Liao stated, highlighting that services consumption is already showing strong momentum. "The Chinese economy will be increasingly demand-driven."

Why the Old Export-Led Model Is Breaking Down

This strategic shift addresses growing unsustainability in China's economic model. While the country met its 5% growth target last year, the expansion was lopsided. Exports accounted for a third of the growth, while domestic demand remained sluggish.

This reliance on exports is becoming increasingly precarious amid rising global protectionism. Internally, the model has fueled issues like industrial overcapacity and prolonged price wars, which have intensified trade tensions with global partners. Beijing has now officially designated boosting domestic demand as its top economic priority for the year.

Dismantling Barriers to Fuel Consumption

The core of the new strategy involves dismantling long-standing local protectionism and inter-provincial trade barriers. Chinese authorities have repeatedly identified these internal obstacles as key factors that suppress consumption and distort the market.

To reassure trading partners concerned about a flood of Chinese goods, the government also announced it will cancel or reduce tax rebates on hundreds of products, including solar cells and batteries, starting April 1. This measure is part of a broader effort to manage excess manufacturing capacity.

Recent Stimulus and Policy Support

In support of this new focus, Chinese authorities have already rolled out several targeted measures to stimulate consumption and investment. These initial steps include:

• Public Spending: An initial plan worth US$51 billion (RM200.56 billion) for investment in key national projects.

• Consumer Subsidies: Financial support for a consumer goods trade-in program.

• Monetary Easing: The People's Bank of China delivered a 25-basis-point cut to interest rates on its structural monetary policy tools.

• Credit Incentives: The Ministry of Finance unveiled a series of loan perks to encourage borrowing by both businesses and consumers.

Navigating Domestic Headwinds and Global Risks

Despite these efforts, significant challenges remain. There is growing expectation that Beijing will lower its national economic growth target this year, reflecting entrenched deflation, a multi-year housing slump, and weak corporate and household confidence.

Concerns over debt risks and thinning profit margins at banks will also likely prevent policymakers from deploying more aggressive, large-scale stimulus. This cautious sentiment is already being reflected at the local level, with over a dozen Chinese provinces reducing their economic growth targets for 2026 after President Xi Jinping signaled greater tolerance for slower expansion and warned against wasteful investment.

In his speech, Liao acknowledged the complex global environment, citing ongoing volatility, rising geopolitical tensions, and supply-chain disruptions. However, he emphasized that the Asia-Pacific remains one of the world's fastest-growing regions, with technology and digital transformation unlocking tremendous economic potential despite "persistent headwinds."

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Donald Trump announced a landmark trade deal between the United States and India on Monday, outlining terms that could significantly reshape economic and geopolitical alignments. While Indian Prime Minister Narendra Modi confirmed an agreement had been reached, he stopped short of validating the specific details Trump shared.

According to Trump’s statement, the deal involves the U.S. lowering tariffs on Indian imports to 18%, while India would eliminate its tariffs on U.S. imports entirely. He also claimed Modi agreed to cease purchasing Russian oil, replacing it with supplies from the U.S. and potentially Venezuela. Furthermore, Trump said India committed to buying $500 billion in American energy, technology, agricultural goods, and other products.

However, this announcement warrants caution, as Trump incorrectly claimed late last year that India had already halted Russian oil purchases. If his account of the new deal is accurate this time, the agreement would be truly historic.

Economic Shockwaves for India's Agricultural Sector

The potential domestic impact on India could be profound. With 42% of the Indian population employed in agriculture, the arrival of tariff-free U.S. agricultural products could threaten the livelihoods of millions. Such a disruption could trigger a mass migration from rural areas to cities, potentially leading to significant socio-economic turbulence and political unrest if not managed carefully.

Prime Minister Modi may be calculating that this risk is worth taking. Increased investment from the U.S. and the EU—which secured its own trade deal with India last month—could create new employment opportunities to offset the agricultural displacement. This high-stakes gamble appears to be driven by a combination of macroeconomic ambitions and pressing security concerns.

Why Modi Might Accept a High-Stakes Gamble

The motivations behind India's potential concessions seem to be threefold: accelerating economic growth, reasserting regional dominance, and responding to geo-economic pressures.

From a macroeconomic perspective, the deal aims to supercharge India's GDP, which was already projected to grow by 7.4% this year despite existing 50% U.S. tariffs. This could help India achieve its goal of becoming the world's third-largest economy by 2030 or even sooner.

On the regional security front, the agreement would restore India's status as the primary U.S. partner in South Asia, a position recently challenged by rival Pakistan. This move could preempt a scenario where the U.S. might use Pakistan and its partner Bangladesh to undermine India's rise.

Geo-economically, India has been navigating a complex landscape. The punitive 25% U.S. tariffs for importing discounted Russian oil are becoming increasingly costly. With the U.S. now offering similarly priced Venezuelan oil as an alternative, the calculus may have shifted. Simultaneously, threatened U.S. sanctions related to business with Iran, coupled with concerns over that country's stability, have made the North-South Transport Corridor through Iran to Russia an unviable option for now. This economic pressure likely pushed India toward prioritizing a deal with the U.S.

Ripple Effects for Russia, China, and BRICS

If the details announced by Trump hold true, it signals that India is recalibrating its grand strategy toward the West, largely as a result of economic coercion. This pivot could have several major international implications:

• A reduced strategic focus on the BRICS alliance.

• A slowdown in efforts to diversify away from the U.S. dollar.

• An increase in defense deals with the United States.

• New challenges in maintaining its recent rapprochement with China.

The most immediate strategic dilemma would fall on Russia. If India, a major customer, stops importing its discounted oil, Moscow would face a critical choice. To stabilize its budget and the ruble, Russia could either become more dependent on China to absorb its oil exports or agree to difficult compromises with the U.S. over Ukraine in exchange for phased sanctions relief.

This decision would have the power to dramatically shift the global balance, tilting it further in favor of either China or the United States. Should this Indo-U.S. trade deal force Russia's hand, it will indeed be remembered as a historic turning point.

Bank of America has upgraded its forecast for the Chinese yuan, joining a growing consensus among Wall Street firms that Beijing will allow its currency to strengthen further. The move signals rising confidence in the yuan's rally, which has been gaining momentum in recent weeks.

Other major institutions, including Goldman Sachs, Morgan Stanley, and Australia & New Zealand Banking Group, have also recently revised their yuan estimates upward as the currency's advance accelerates.

Major Banks Revise Yuan Targets Upward

Bank of America now projects the onshore yuan will reach 6.7 per U.S. dollar by the end of the third quarter, a notable revision from its previous forecast of 6.8.

Claudio Piron, head of Asia rates and currency strategy at BofA Global Research, cited "robust exports and firmer policy signals" as key factors behind the new forecast. "The yuan's strength is spilling into broader emerging-market FX gains," he noted.

Goldman Sachs also sees continued strength, forecasting the yuan will hit 6.80 in six months and 6.70 in twelve months. The bank credits this outlook to greater tolerance from Chinese policymakers and record capital inflows.

Key Drivers Behind the Currency's Rally

The yuan's appreciation isn't happening in a vacuum. Several powerful forces are fueling its recent performance:

• Sustained Capital Inflows: A significant surge in capital flowing into China since last year has provided a strong foundation for the currency.

• A Weaker U.S. Dollar: Expectations that the United States may favor a weaker dollar have created a favorable environment for the yuan's rise.

• Support from Beijing: Recent comments from President Xi Jinping, detailed in state media, expressing an ambition for a "powerful currency" have bolstered investor confidence.

PBOC Signals Tolerance for Appreciation

Actions from the People's Bank of China (PBOC) have reinforced the bullish sentiment. On Wednesday, the central bank set its daily reference rate for the yuan at its strongest level since May 2023. This followed a move last month where the PBOC raised the "fixing" by the largest margin in over a year.

The policy signals have translated directly into market performance. This week, the yuan touched its strongest point in nearly three years in both onshore and overseas trading.

Managing the Risks of a Rapid Rise

Despite the widespread bullishness, analysts believe the PBOC will aim for a managed and orderly pace of appreciation. A currency that strengthens too quickly could pose risks to China's formidable export engine and attract speculative "hot-money" inflows.

According to strategists at TD Securities, the central bank could adjust "structural FX parameters" if the yuan's appreciation becomes too sudden. Potential policy tools include:

• Removing risk reserves on foreign exchange forward sales.

• Increasing the reserve requirements on foreign exchange.

These measures would allow the PBOC to moderate the currency's ascent without derailing its overall trajectory.

The cost of doing business in Pakistan is about one-third higher than in regional peers and the gap appears to be discouraging entrepreneurship and quietly pushing more people toward salaried employment instead of pursuing their own startups, recent private research shows.

Last month, Pakistan Business Forum (PBF), a national organization representing trade and industry, found that operating a business in the country is 34% costlier than in neighboring South Asian countries. Ahmed Jawad, the PBF's chief organizer, shared the findings with Nikkei Asia in an interview on Friday.

Jawad said the analysis was based on industrial data available as of December 2025 and that a mix of structural factors is driving the costs. "Fuel taxes remain high, with an additional petroleum development levy of about 80 rupees ($0.28) per liter, while interest rates are around 12.5%, nearly double the 6 to 7% seen in the region," he said.

He added that electricity expenses average about 34 rupees per unit, compared with a regional average of 17 rupees. The sharp depreciation of Pakistan's currency -- which tumbled from 110.7 rupees per dollar in January 2018 to 280 rupees per dollar in December 2025 -- has made imports far more expensive. "In addition, the overall tax burden can reach up to 55%, significantly higher than in regional economies," he told Nikkei Asia, referring to the effective tax rate for companies.

Bilal Ghani, executive director of research and consultancy firm Gallup Pakistan, said hat input costs have risen largely because of policy choices that restrict competition. "Trade and industrial policies have often protected domestic producers by restricting imports of cheaper foreign inputs," he told Nikkei. "Instead of allowing firms to access globally competitive inputs, businesses are forced to rely on more expensive local alternatives."

He further added that Pakistan is perceived as a high-risk jurisdiction due to terrorism, money-laundering concerns, and geopolitical tensions. Therefore, its firms face far more licensing, certification and due diligence requirements than companies in most other developing countries. "[Those] requirements raise the fixed cost of doing business, particularly for exporters and technology firms," he said.

The costly environment appears to be hurting Pakistan's economy, particularly exports, which have struggled to achieve sustained growth since 2021, as Jawad offering as examples the "hundreds of medium-sized businesses in the textile sector" that have shut down in recent years. "The trade agreement between the European Union and India, which is favorable to India, could further disadvantage Pakistan's textile sector," he added.

That is Pakistan's largest exporting industry, accounting for around 60% of total overseas shipments in fiscal year 2024. In December last year, the PBF wrote a letter to Prime Minister Shehbaz Sharif, asking the government to address the cost of doing business with concrete measures, including regionally competitive electricity tariffs and more competitive corporate tax rates.

In addition to the PBF's analysis, Gallup Pakistan released one covering household income and expenditure last month. It shows that salaried employees now account for 60.1% of the workforce, up from 53.4% in fiscal 2010-2011, while self-employment has remained low at 21.8%, down from 24.4% in 2010-2011.

Ali, a business graduate based in Islamabad who asked that his full name not be used, said he tried to start a restaurant after completing his studies but later abandoned the plan in frustration. "I was hounded by so many government departments that I ultimately decided to give up the idea and started looking for a job," he told Nikkei.

"The cost of doing business is high, which is pushing more people toward salaried jobs, while bureaucratic hurdles, limited access to finance and ongoing political and economic uncertainty continue to constrain small businesses," Niaz Murtaza, an independent economist based in Islamabad, told Nikkei.

Ghani, from Gallup, points toward an educational dimension in which the number of salaried workers in Pakistan is increasing. "Entrepreneurship, risk-taking and opportunity recognition were never meaningfully integrated into higher education curricula in Pakistan. Instead, students were socialized to become efficient workers for large firms and multinationals," he added.

Source: Asia_Nikkei