U.S.–China Trade Truce Brings Temporary Relief Amid Persistent Strategic Rivalry

Economic

China–U.S. Trade War

Summary:

The latest U.S.–China trade agreement has reduced tariffs and softened export restrictions, signaling a short-term thaw. However, analysts warn the détente is fragile,...

A tactical pause, not a strategic reset

The sweeping trade deal signed by U.S. President Donald Trump and Chinese President Xi Jinping in late October entered into effect this week, marked by a coordinated rollback of tariffs and export controls. The U.S. halved its fentanyl-linked tariffs on Chinese imports from 20% to 10% and extended for one year a broader truce that lowers mutual tariff rates from 34% to 10%. In parallel, China lifted recent curbs on the export of critical minerals such as gallium, germanium, antimony, and synthetic diamonds materials vital for semiconductors and defense manufacturing.

While these steps suggest progress, experts warn they should not be interpreted as a genuine reconciliation. Wendy Cutler of the Asia Society Policy Institute notes that although current actions indicate “so far, so good,” they merely buy time rather than resolve the root causes of the economic standoff. This characterization suggests a correlational dynamic, where temporary improvements mask deeper systemic tensions.

China hedges with control frameworks and strategic end-user systems

Despite rolling back specific trade restrictions, Beijing has retained its broader export-control framework established in April. Economists from Morgan Stanley describe this as a “calibrated choke-point” approach an intentional design to maintain pressure while appearing cooperative. This reflects a causal strategy, where Beijing’s partial compliance is used to preserve leverage in ongoing negotiations.

Additionally, reports indicate China is building a “validated end-user” (VEU) system to block rare earth shipments to companies with ties to the U.S. military. This tool, if implemented rigidly, could severely disrupt supply chains in sectors such as aerospace and automotive that span civilian and defense applications. Such systems represent a shift from reactive retaliation to proactive constraint embedding long-term restrictions into China’s trade infrastructure.

Fentanyl, shipping, and soybeans: tactical trade-offs across sectors

The trade agreement also addressed non-tariff elements. China added 13 fentanyl precursors to its export control list, requiring licenses for shipments to the U.S., Mexico, and Canada. On the maritime front, China suspended port-related sanctions against U.S. shipping entities and five Hanwha Ocean-linked subsidiaries. In return, the U.S. Trade Representative agreed to pause parallel measures for a year.

Agriculture also featured prominently in the deal. The White House announced China’s commitment to purchase 12 million metric tons of soybeans by year-end and 25 million tons annually over the next three years though Beijing has not confirmed these figures. Nonetheless, Reuters reported resumed Chinese soybean orders, reversing a year-long drought in bilateral commodity trade. This forms a causal linkage, where commodity flows are directly influenced by political detente.

China’s economic slowdown and strategic recalibration

China’s economy, battered by years of trade tensions, grew just 4.8% in Q3 its weakest pace in a year. In response, the State Council on Monday unveiled 13 measures to boost private investment in key state-controlled sectors, reinforcing Beijing’s focus on domestic capacity building.

Neil Thomas of the Asia Society observes that China’s leadership is using the truce not to pursue reconciliation but to “buy time and build leverage.” The October economic plenum emphasized self-reliance under “fierce international competition,” echoing a broader shift toward strategic insulation.

This posture signals that while both countries may seek temporary stability, their long-term paths continue to diverge. Xi Jinping, facing structural economic pressures, is doubling down on a narrative of technological self-sufficiency and geopolitical resilience. Meanwhile, Trump’s strategy appears more transactional prioritizing immediate concessions and symbolic wins.

The U.S.–China trade truce may calm short-term tensions, but it does little to change the underlying calculus of strategic competition. Both sides are navigating a world where economic interdependence is giving way to decoupling, national security concerns, and supply chain reconfiguration. Rather than a turning point, the latest trade agreement serves as a pause in a longer struggle for technological, economic, and geopolitical advantage. Markets and policymakers alike must prepare for an era of episodic truces, not enduring peace.

Source: CNBC

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Gerik

Economic

Stocks

Foreign capital fuels Vietnam’s M&A resurgence

Vietnam’s M&A market witnessed a resurgence in October 2025, with a total of 52 transactions valued at approximately $720.45 million, according to Grant Thornton’s latest report. While the aggregate deal value is on par with September, the structural composition of deals suggests a deeper market recovery. Most of the deals were strategic and spearheaded by foreign investors, reversing the previous trend of internal corporate restructurings.

This shift marks a significant return of private equity (PE) funds, many of which made their debut in Vietnam’s deal landscape during this month. The influx of long-term capital highlights growing international confidence in the Vietnamese economy despite global uncertainties. These trends reveal a causal relationship between macroeconomic stability and renewed cross-border capital flows into Vietnam’s private sector.

Real estate and manufacturing dominate by value, energy surges in scope

Among the sectors, real estate and industrial manufacturing led in estimated value, with real estate contributing around $225 million and industrial production about $109 million. The energy sector also stood out, with $115 million in total transaction value, supported by both scale and volume, including seven key deals in October.

Manufacturing led in terms of transaction count, with 10 deals, while energy followed with 7. Other sectors averaged 4–5 deals each, suggesting broader diversification in investment targets and rising confidence across multiple industries. This pattern demonstrates a correlational shift where sector-wide M&A activity reflects growing investor appetite beyond traditional verticals.

Vincom Retail leads real estate M&A with strategic restructuring

One of the most prominent real estate deals was Vincom Retail’s sale of a 99.99% stake in Vincom NCT, which owns the Vincom Center Nguyễn Chí Thanh, to Bảo Quân Investment and Service Company for approximately $133 million. This transaction is part of a broader strategic pivot by Vincom Retail to focus on mega-malls integrated with Vinhomes’ urban developments. New mega malls in Ocean City and Royal Island have already launched, and more investments are planned for the massive Cần Giờ project.

This transaction represents a causal realignment of corporate strategy, where asset divestments are being used to fund targeted expansions in high-growth commercial retail formats.

Energy M&A expands as foreign players invest in renewables

The energy sector saw four notable transactions. Japanese conglomerate Sumitomo acquired a 49% stake in Cửu Long Power Development JSC, owner of Đăk Di 1 & 2 hydropower plants. Meanwhile, Levanta Holding took an 80% stake in HBRE Gia Lai Wind Power JSC for $33.1 million. Other deals include Verdant Energy’s acquisition of a rooftop solar portfolio (11 MW) and Platinum Victory’s $43.6 million share purchase in REE Corporation.

This rise in renewable energy M&A indicates a causal trend driven by Vietnam’s ongoing transition toward cleaner energy and the appeal of scalable energy infrastructure projects for international investors.

Industrial M&A backed by strategic capacity expansion

South Korea’s OCI Holdings, via its subsidiary OCI ONE, acquired 65% of Elite Solar Power Wafer’s Vietnamese factory, investing $120 million in the initial phase. The plant’s projected capacity expansion to 5.4 GW within six months highlights how Vietnam is becoming central to regional renewable energy supply chains.

This acquisition reflects a strategic integration move, positioning OCI to secure upstream materials in the solar energy sector, with Vietnam as a key production hub.

Diverse sectors reflect a maturing investment landscape

Beyond the traditional sectors, October’s M&A wave also reached logistics, consumer goods, healthcare, agriculture, utilities, and finance:

Logistics: MyStorage secured funding from EMIA to expand self-storage facilities and tech platforms.

Consumer: Coolmate completed a Series C round led by Vertex Growth Fund to broaden its product lines and retail reach.

Healthcare: MEDLATEC welcomed Ares Asia PE as a strategic investor, marking the latter’s first venture into Vietnam’s medical sector. Simultaneously, DSC Securities raised its stake in VIDIPHA to nearly 20%, equivalent to an $8 million investment.

Agriculture: Dabaco acquired an additional 41.67% stake in Thịnh Phát Kim Sơn 1 for a high-tech pig farm in Lào Cai, valued at 560 billion VND.

Utilities: PIDG invested over 218 billion VND in AquaOne’s Hòa Bình-Xuân Mai water plant to enhance rural and suburban water supply in Phú Thọ.

Finance: TPBank raised its ownership of Tiên Phong Securities (ORS) to 51%, injecting nearly 3.6 trillion VND in a private share issuance that lifted TPS’s charter capital to 6.239 trillion VND.

This breadth of sectoral engagement illustrates a correlational maturity in Vietnam’s investment ecosystem, where varied industries now present viable M&A opportunities.

October 2025 marks a pivotal point in Vietnam’s M&A evolution. The surge in deal volume, the return of private equity, and the rising presence of first-time foreign investors indicate a fundamental revival in deal-making. Strategic shifts by major domestic players like Vincom Retail and the growing influence of international capital in energy and industry reflect a transforming business environment. As Vietnam strengthens its institutional, regulatory, and macroeconomic foundations, it is increasingly viewed not just as a growth story but as a strategic node in global investment networks.

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Samantha Luan

Stocks

Economic

Federal Reserve Governor Michael Barr said although artificial intelligence will transform economies, there are a range of outcomes as to how that will play out.

Barr, in remarks prepared for a speech Wednesday at the Singapore FinTech Festival, outlined two basic scenarios. In the first, adoption of generative AI could augment existing tasks and roles. In the second, it could lead to a transformative impact, where work and leisure undergo radical change that boosts efficiency and remakes firms with new business models.

"Right now, it is difficult to predict which scenario (or perhaps one or more intermediate scenarios) will come to pass," he said.

Fed officials elected to cut their benchmark interest rate at each of their last two policy meetings following a sharp slowdown in hiring over the summer. Recent public comments indicate they are divided over the need for a third reduction in December, though investors are betting on one, according to futures.

In his speech, Barr pointed to a New York Fed survey showing AI has led employers to scale back hiring plans — a development the Fed governor suggested may be contributing to slower levels of job creation — though he didn't comment on the near-term outlook for monetary policy.

He also pointed to the possibility that the trillions of dollars in planned capital investment into data centers could drive significant economic change, including productivity gains.

"Investment in capital generally raises labor productivity and offers the potential for higher output growth without pressure on inflation over the longer term," Barr said. "As I have discussed in previous remarks, if these changes are significant, they can also affect the conduct of monetary policy."

Source: Bloomberg Europe

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Justin

Forex

Central Bank

Political

Economic

Global lenders like Goldman Sachs Group Inc. retracted calls for further monetary stimulus in China this year after the central bank telegraphed more patience in steering an economy still on track to hit growth targets.

The People's Bank of China downplayed concerns over a slowdown in new loans and pledged in a Tuesday report to adopt "cross-cyclical" policy adjustments. Appearing for the first time in more than a year in its quarterly statements, that phrase emphasizes a longer-term horizon that looks beyond temporary volatility in economic growth.

The latest messaging from officials prompted Goldman economists to push back their forecast for the next reduction in China's policy interest rate and reserve requirement ratio to the first quarter of 2026, from the final months of this year. Analysts at Zheshang Securities Co. also see a lower probability of rate and RRR cuts before the end of 2025, saying in a Tuesday report that broad easing could be reserved for early 2026 to ensure the economy gets off to a smooth start next year.

Even prior to this week's PBOC report, Citigroup Inc. and Bloomberg Economics also shifted to expecting no further rate cuts in 2025.

The guidance suggests "the PBOC is willing to tolerate further moderation in loan growth rather than respond with broad-based monetary and credit easing," Xinquan Chen, an economist at Goldman, wrote in a note Wednesday.

The changes are causing a rethink after the PBOC already surprised by acting with restraint in easing monetary policy this year. Its shift to a "moderately loose" stance for the first time since 2010 initially led economists including those at Goldman to forecast the biggest rate cuts in a decade.

But the actual stimulus has fallen well short of those expectations, with just one 10-basis point rate reduction delivered so far this year in May.

The economy has been unexpectedly resilient in the face of a second US-China trade war. Officials also proceeded with caution as the stock market boomed for months after China's breakthroughs in technology including artificial intelligence set off euphoria among investors.

But the risk is that insufficient stimulus could leave the economy vulnerable over the longer term by prolonging deeper problems including deflation, the property downturn and weak consumer confidence.

The yuan was little changed after the PBOC on Wednesday set its daily reference rate at the strongest level since October 2024. The 10-year yield was steady at 1.8% while the one-year rate was unchanged at 1.4%.

Another factor shaping the PBOC's policy path is its resumption of government bond trading last month. While modest at the moment, its purchases of sovereign debt could inject substantial liquidity into the financial system if the central bank ramps up its use of the program.

The wording in the latest PBOC report "implies that Beijing might be more cautious in its policy stimulus," Huaxi Securities analysts led by Liu Yu wrote in a note. "The goal is to put a floor under the economy to avoid a stall, thereby safeguarding the foundations of the recent recovery."

Source: Bloomberg Europe

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Gerik

Economic

RBA raises red flag on market underpricing of geopolitical risk

At a major financial conference in Queensland, RBA Assistant Governor Brad Jones delivered a stark warning that current market behavior may be masking deeper systemic vulnerabilities. Speaking to an audience at the Association of Superannuation Funds of Australia, Jones highlighted that risk premiums across various asset classes have declined to “concerning lows,” suggesting a disconnect between pricing and actual macroeconomic and geopolitical conditions.

The concern lies not in the sustainability of the low premiums themselves, but in the apparent disregard for what Jones termed a “confronting set of potential risks.” This suggests a causal disconnect despite a rising threat environment, investor behavior has not adjusted proportionately, indicating potential mispricing of tail risks.

Shifting central bank reserves reflect signs of global fragmentation

One of the most striking elements in Jones’s remarks was the observation of fragmentation in central bank reserve strategies. He noted that a limited group of countries has driven a significant increase in gold holdings, implying that fears of asset seizure or sanctions may be prompting some governments to de-dollarize or diversify away from traditional reserve assets.

This emerging pattern hints at deeper structural reconfiguration in the global financial order, where geopolitical tensions are directly influencing sovereign asset allocation. The shift toward gold, a non-sovereign, non-seizable store of value, underscores how concerns about Western sanctions or asset freezes are reshaping behaviors in subtle yet significant ways.

This relationship is causal in nature: the growing use of sanctions and financial weaponization appears to be driving a precautionary accumulation of gold by certain central banks, possibly as a hedge against Western jurisdictional risk.

Concerns grow over fragmentation of global financial systems

Beyond reserve holdings, Jones also mentioned fragmentation risks in global payments infrastructure and financial safety nets. While these concerns are not yet fully realized, they are increasingly present in policy circles. For example, as alternative payment systems and non-dollar settlements gain momentum, the risk of bifurcation in global finance becomes more tangible.

Although still largely theoretical, this correlational shift signals the early stages of a divided monetary ecosystem where geopolitical alignment could determine access to capital flows, clearing systems, and safety nets. The RBA is signaling that such fragmentation, while not yet disruptive, is approaching a threshold where its effects could become self-reinforcing.

Complacency in financial markets poses vulnerability to sudden shocks

A central theme in Jones’s speech was the idea that markets are misjudging the probability of binary risks those which involve sharp, discontinuous outcomes such as war, sanctions, or financial embargoes. With risk spreads narrowing despite these growing uncertainties, central banks are increasingly perplexed by what they perceive as market complacency.

This raises the possibility of an eventual snapback effect where risk premiums rapidly widen once dormant risks are re-evaluated or triggered. The concern is that in the absence of gradual repricing, a single shock could provoke an outsized correction across asset classes, especially in a financial system already showing signs of stress at the institutional level.

Jones’s comments reflect a growing realization among policymakers that the global financial system may be entering a period of strategic fragmentation, with asset preferences, payments infrastructure, and safety nets increasingly aligned along geopolitical lines. The RBA’s message is clear: markets must take a more sober view of emerging risks and prepare for volatility, as the era of stability anchored in a unified global monetary regime may be giving way to a more fragmented and uncertain order.

Source: Bloomberg

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Justin

Forex

Political

Economic

Federal Reserve officials are growing increasingly fractured over whether to cut interest rates in December, the Wall Street Journal's Nick Timiraos reported on Tuesday.

Timiraos– who earned the moniker of the "Fed whisperer," said officials are split over what poses a greater threat to the economy– sticky inflation or a sluggish labor market– with recent delays in official data, due to a prolonged government shutdown, adding to this friction.

The central bank had cut interest rates by 25 basis points in near unanimous decisions in September and October.

But a contingent of hawkish policymakers questioned the need for further rate cuts, especially a third consecutive cut in December.

Chair Jerome Powell had also pushed back against expectations that a December cut was a given.

Friction over a December cut was exacerbated by the longest ever government shutdown, which delayed the release of several official inflation and labor reports.

Still, the shutdown is set to end this week, allowing the government to release several key economic prints before the Fed's meeting in December.

CME Fedwatch showed markets pricing in a 61.9% chance the Fed will cut rates by another 25 basis points during its December 10-11 meeting, and a 38.1% chance it will hold rates steady.

Source: Investing

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Gerik

Economic

Cryptocurrency

JPYC’s ambition: Driving yen relevance in a dollar-dominated digital finance world

Japanese startup JPYC made headlines by launching the country’s first domestically issued yen-pegged stablecoin on October 27, entering a global arena where dollar-backed tokens dominate 99% of the $290 billion stablecoin market. With an early issuance volume of ¥143 million and over 4,700 account holders by mid-November, JPYC’s goal is to scale issuance to ¥10 trillion (approximately $66.3 billion) within three years.

According to CEO Noritaka Okabe, this move is not only about innovation in digital payments but also about asserting the yen’s role in a rapidly evolving financial ecosystem. As cross-border transactions increasingly shift to real-time blockchain rails, Japanese firms currently face higher hedging and transaction costs due to dollar dominance in stablecoins. JPYC aims to mitigate that disadvantage by offering a domestically anchored, blockchain-compatible currency.

This presents a causal relationship between the dollar’s dominance in stablecoins and the increased financial friction faced by Japanese firms. JPYC’s mission, then, is to realign these flows to benefit yen-based systems.

Linking stablecoin growth to Japan’s sovereign bond market

One of the most notable features of JPYC is its asset-backing strategy: 80% of its reserves will be invested in Japanese government bonds (JGBs), with the remaining 20% in bank deposits. This investment allocation is intended to provide price stability while indirectly integrating JPYC into Japan’s sovereign bond ecosystem.

Okabe suggests that as stablecoins scale, their issuers may become pivotal players in JGB markets, especially as the BOJ continues its tapering strategy. The BOJ, currently holding nearly half of the ¥1,055 trillion JGB market, has reduced bond purchases as it slowly exits its ultra-loose monetary stance.

The implication here is significant: if JPYC and other issuers expand rapidly, they could absorb part of the demand gap left by the BOJ. This projection reflects a potential causal link as the BOJ scales back, the resulting vacuum in bond demand might be partially filled by emerging fintech actors like JPYC.

Stablecoin influence: A new constraint on central bank policy?

With potentially billions flowing into JGBs through stablecoin operations, monetary authorities may soon face a novel challenge. Unlike traditional institutional bondholders, whose purchases are typically guided by financial strategy or central bank policy, stablecoin demand is tethered to the supply-demand balance of digital tokens.

Okabe notes that while regulators could influence the duration of JGBs stablecoin issuers are allowed to hold, it will be difficult to control volume, as that would depend on consumer-driven token issuance. This introduces a feedback loop between monetary policy, digital asset demand, and sovereign debt markets.

This mechanism represents a correlational dynamic: the influence of stablecoin-backed JGB buying is shaped by decentralized market behavior rather than top-down monetary control, potentially limiting central bank flexibility in managing long-term yields.

Regulatory tensions and future directions for JPYC

Despite the growth potential, policymakers remain cautious. Stablecoins have drawn regulatory scrutiny for their capacity to facilitate off-bank fund flows, posing a challenge to traditional commercial banking roles in payments. Even so, Japan’s top three banks under the watchful eye of financial regulators are experimenting with joint stablecoin issuance, suggesting a cautious but open approach from public institutions.

JPYC, while currently focused on short-term securities, has already been approached by lawmakers and government officials about possibly expanding into longer-dated JGBs. Such a shift would elevate JPYC’s role from a digital payment tool to a systemic investor within Japan’s debt market.

Whether such expansion unfolds depends on multiple factors: consumer adoption, regulatory green lights, and the BOJ’s evolving position. Yet the groundwork is being laid for a future in which stablecoin issuers are not just financial intermediaries, but also key macroeconomic actors.

JPYC’s rise underscores a broader trend where financial innovation intersects with sovereign policy. What began as a digital tool to reduce transaction frictions for Japanese firms could soon evolve into a force shaping bond yields and central bank influence. As Japan and other nations navigate this shift, the stability and scale of stablecoin issuers may become as relevant to monetary strategy as traditional financial institutions. In the coming years, Japan’s bond market may no longer be shaped solely by ministries and central banks but also by the invisible flows of digital tokens backed by the yen.