Driving commercial and political engagement between Asia, the Middle East and Europe

  • Asia House
  • 63 New Cavendish Street
  • London W1G 7LP
  • enquiries@asiahouse.co.uk
  • +44 (0) 20 7307 5454
  • Driving commercial and political engagement between Asia, the Middle East and Europe

    The Week in Asia – May 2021

    Published On: 1 May 2021

    Asia House Advisory takes a look at the top developments in Asia this week affecting trade, investment and public policy.

    Join our mailing list to receive The Week in Asia direct to your inbox every Friday.


    FRIDAY 28 MAY 2021


    US and China hold first trade talks since August 2020

    Senior trade officials from the US and China held a telephone call this week in a sign that trade relations could be thawing. Chinese Vice-Premier Liu He and US Trade Representative Katherine Tai spoke on Thursday, making this the first US-China trade talks since August 2020. In a small but hopeful sign of warming trade relations between the two countries, the discussion was described as ‘constructive’ and ‘pragmatic’ by China’s Commerce Ministry, and underscores a shared commitment to improving trade ties that have been strained over recent years. Despite this, high-level concerns remain in the US about Beijing, with little evidence that the wider US-China relationship has undergone a significant shift under the Biden administration. On Thursday, the White House’s Indo-Pacific policy director, Kurt Campbell, said that engagement with China had ‘come to an end’, with competition now the ‘dominant paradigm’.

    Japan set to launch net-zero initiative with ASEAN nations

    Government sources have indicated this week that Japan is set to launch a new initiative with ASEAN member-states to significantly curb green-house gas emissions amid accelerating efforts globally to reach carbon neutrality by 2050. Japan’s Ministry of Economy, Trade, and Industry (METI) will host a meeting for ASEAN countries in June, according to the sources. Tokyo will lead the way in establishing a loan arrangement worth US$10 billion made up from public and private investment, which includes funds from the Japan Bank for International Cooperation. The money will be directed at shifting ASEAN industries away from coal-power plants and towards liquified natural gas and renewable energies such as offshore wind sources and solar power infrastructure. The initiative is a further signal of Japan’s accelerated climate commitment efforts – in April, Tokyo increased its initial  pledge to cut greenhouse gas emissions from 26 per cent to 46 per cent by 2030, from 2013 levels.

    Asia House is exploring the business and policy approach to climate change through the Asia House COP26 Programme. Find out more.

    South Korea’s economic growth outlook improved amid increased export demand

    The central bank of South Korea, Bank of Korea (BOK), revised its economic growth for 2021 by four per cent this week, marking a one per cent increase from previous forecasts published  in February. The economic forecast for 2022 was also upgraded by 0.5 per cent, a rise from initial growth estimates of three per cent. Elsewhere, as markets have anticipated, BOK’s monetary policy board did not alter the key interest rate, leaving it frozen at a record low of 0.5 per cent. Inflation forecasts for 2021 were also amended by BOK and raised by 1.8 per cent. The latest projections reflect significant improvements to South Korea’s domestic economy and the wider global economy amid the ongoing impacts of the pandemic. In line with this, export growth projections have been lifted by BOK from seven per cent to nine per cent. The country’s exports have also particularly benefited from surging demand for semiconductors.

    UK exploring free trade deal with GCC

    UK International Trade Secretary Liz Truss said this week that the Department for International Trade (DIT) is targeting a deal with the Gulf Cooperation Council (GCC) nations. In April, Truss held talks in the UAE and Saudi Arabia regarding a UK-GCC Joint Trade and Investment Review, which is expected to conclude in June and could be used as a basis for a free trade agreement. UK trade with the GCC was worth £45 billion in 2019 – the UK’s fourth largest trade total after the EU, US, and China. DIT is also in discussions with Abu Dhabi’s sovereign wealth fund Mubadala regarding a £5 billion investment deal into the UK’s technology, clean energy, and infrastructure sectors. This follows Mubadala’s £800 million investment in March into UK life sciences and healthcare over the next five years.

    HE Mansoor Abulhoul, UAE Ambassador to the UK, will discuss the UK-UAE trade and investment relationship when he briefs Asia House Corporate Members on 10 June. Find out more.

    Oman pledges thousands of public sector jobs following widespread protests

    The Sultan of Oman, Haitham bin Tarik, has issued a directive for the government to immediately accelerate the creation of 32,000 full time and part-time jobs across the military and civil service. The move is an effort to curb social unrest following several consecutive days of nationwide protests over a lack of employment opportunities. Youth unemployment levels are particularly high in Oman, currently at around 15 per cent. Figures from Oman’s National Center for Statistics and Information have also shown an increase in overall unemployment between December 2020 and January 2021, from 2.9 to three per cent. The protests follow the introduction of austerity measures by Sultan Haitham over recent months, notably including the introduction of five per cent VAT in March,  as the country grapples with a spiralling deficit amid the twin shocks of volatile oil prices and COVID-19 lockdowns. In Q1 of 2021, the deficit expanded to US$2billion, up from around US$700 million in Q1 of 2020. According to recent projections from the International Monetary Fund, Oman’s economy shrunk by around 10 per cent across 2020, marking one of the Gulf’s sharpest contractions. There is a risk of further economic instability over the near-term as private sector activity and oil prices continue to be affected by the pandemic.



    The OPEC Joint Ministerial Monitoring Committee will take place on 1 June: The current oil production schedule will be key on the agenda, with it likely that OPEC+ will stick to the existing plans to increase production.

    APEC meeting of Ministers Responsible for Trade is set for 4-5 June: The meeting will be hosted virtually by New Zealand and will focus on three areas: Economic and trade policies that strengthen recovery; increasing inclusion and sustainability for recovery; and pursuing innovation and a digitally enabled recovery.



    CHINA: Chinese health experts have advised that individuals in high-risk categories should receive a third COVID-19 vaccine shot, indicating that the vaccine’s effectiveness reduces after six months.

    JAPAN: The ongoing fourth-wave of COVID-19 across Japan has prompted public considerations by government officials that a state of emergency in Tokyo, Osaka and seven other prefectures could be extended beyond its deadline of 31 May.

    SOUTH KOREA: Novavax Inc has signed an agreement with the government of South Korea and SK Bioscience Co Ltd to increase its production of vaccines following a summit between US President Joe Biden and South Korean President Moon Jae-In.

    THAILAND: The government has announced that Thai borders will be tightened following the discovery of local cases of the South African COVID-19 variant. New measures will include increased manpower at checkpoints and tougher handling on the tracking of illegal migrants.

    VIETNAM: Daily COVID-19 case numbers are continuing to steadily rise with the most recent tally on Sunday 23 May adding 156 new cases to the domestic count; infections levels have increased significantly since the beginning of the month.


    These COVID-19 insights are taken from Asia House Advisory’s focused monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please contact advisory@asiahouse.co.uk for further details on this and our other advisory services.

    FRIDAY 21 MAY 2021


    EU-China investment deal ‘frozen’ as MEPs back resolution over sanctions

    The controversial investment agreement between the European Union (EU) and China hit a setback this week, with EU policymakers voting to halt the ratification of the deal. MEPs backed a resolution to pause the EU-China Comprehensive Agreement on Investment (CAI) by 599 votes in favour, 30 against and 58 abstentions. In a statement, the parliamentarians said discussions on the CAI have ‘justifiably been frozen’ because of Chinese sanctions on members of the European parliament and institutions. The resolution demands that China ‘lift the sanctions before parliament can deal with the CAI’. Those sanctions were imposed by China after the EU placed sanctions on Chinese officials in March relating to suspected human rights abuses in Xinjiang. Responding to the resolution, China’s foreign ministry said ‘the unreasonable sanctions imposed by the EU have led to difficulties in China-EU relations. That is what China does not want to see, and the responsibility does not lie with the Chinese side.’

    China imposes new restrictions on cryptocurrencies

    The People’s Bank of China announced a directive on Tuesday 18 May from the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China. The three institutions have ruled that Chinese financial services, which includes banks and online payment channels, would no longer be permitted to accept virtual currencies or utilise them for payments. They are also now banned from facilitating exchanges between Renminbi (RMB) and foreign currencies with any type of cryptocurrency. The crypto-currency markets have since experienced a period of high volatility, with leading currencies Bitcoin and Ethereum falling sharply by 30 per cent and 45 per cent respectively. The move comes as China progresses towards the launch of its own digital RMB and likely reflects ramped up efforts to curb cryptocurrencies, which have increased in value over the last 12 months amid surging interest. The crackdown will ultimately hamper the ability to invest in, purchase and exchange cryptocurrencies in China.

    Indonesia’s largest start-ups announce US$18 billion merger

    The merger between Indonesia’s two biggest start-ups, ride-hailing and financial services company Gojek and ecommerce platform Tokopedia, was officially announced on Monday 17 May. The deal, which will create a US$18billion company named GoTo, marks the country’s biggest merger and the establishment of South-East Asia’s largest tech start-up. The newly formed group now holds a total of 100 million active users per month, and while its primary market is Indonesia, it is likely that GoTo will quickly expand and build engagement across the region. The merger is a further sign of Indonesia’s fast moving digitalisation efforts and online-to-offline shift.

    Presidents Joe Biden and Moon Jae-in meet in Washington

    US President Joe Biden and South Korean President Moon Jai-in are meeting at the White House today. The summit reflects the US administration’s newly calibrated foreign policy strategy and prioritisation of the Indo-Pacific region, and closely follows Biden’s talks with Japanese Prime Minister Suga in April. A key topic on the agenda will likely be ‘Quad-Plus’, a developing strategy that could see South Korea join the current Quad alliance between the US, Japan, India and Australia. However, South Korea’s deep trading and economic relations with China means that any movement by Seoul to join the Quad would be cautious and incremental. Wider issues on the summit’s agenda include the COVID-19 pandemic including a potential boost in support from Washington to Seoul’s vaccine supplies; relations with North Korea; and climate change commitments.

    Oil prices move as hopes grow for Iran nuclear deal breakthrough

    Negotiators are optimistic that a deal with Iran is close as the fourth round of nuclear talks in Vienna draws to a close. Top EU negotiator, Enrique Mora, stated he is “quite sure” a final agreement would be reached, and Iran’s top negotiator Abbas Araghchi said “good headway has been made”, although “key issues” remain. Iranian and US officials are carefully working through how to choreograph the lifting of US sanctions in return for Iran returning to compliance with the nuclear deal. President Rouhani claimed on Thursday that the US was willing to lift sanctions on Iran’s oil, banking, and shipping sectors, with brent crude prices falling by 2.3 per cent as traders anticipate the return of Iranian oil to global markets. Officials had wanted to reach a deal by today (21 May) as this is when a three-month agreement between Iran and the International Atomic Energy Agency (IAEA) expires, allowing Iran to withhold nuclear monitoring data from the IAEA. An extension to the IAEA-Iran agreement would be a positive signal that a deal might be close. The fifth round of negotiations will begin early next week.



    The 15th National Assembly and People’s Council Elections in Vietnam: The elections are scheduled for 23 May; 500 seats will be competed for by 868 candidates.

    World Trade Organization Review: A WTO committee will conduct the next WTO budget review on Tuesday 25 May, submitting recommendations to the General Council.

    Syrian Presidential Elections: Voting will take place on Wednesday 26 May; three candidates are running, with incumbent president Bashar al-Assad predicted to secure a landslide victory.


    CHINA: Lu’an city, situated the eastern Anhui province, reported two COVID-19 infections on Thursday 13 May, marking the first new locally transmitted infections in three weeks. Mass testing has since been instigated for residents based in three districts across the city; a total of seven new COVID-19 cases were reported as of last Thursday.

    JAPAN: A recent fourth-wave of COVID-19 cases across Japan has elevated concerns that hospitals could soon become overwhelmed, with beds almost at capacity in Osaka, where infection levels are highest.

    SOUTH KOREA: On Monday 17 May, SK Bioscience announced that its COVID-19 vaccine facility had been granted approval by the European Union Good Manufacturing Practices, meaning that vaccine exports to the EU market from South Korea are set to take place.

    INDONESIA: The Health Minister, Budi Gunadi Sadikin, said on Monday 17 May that a spike in COVID-19 cases was likely following an annual exodus of Indonesians back to their hometowns amid Eid celebrations, and indicated that the government was prepared for the sharp increase and had ensured more hospital beds had been made available.

    SINGAPORE: New COVID-19 restrictions came into force last week amid a recent rise in daily case numbers, notable measures include the banning of dining in restaurants and gatherings of more than two people.

    These COVID-19 insights are taken from Asia House Advisory’s focused monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please reach out to advisory@asiahouse.co.uk for further details on this and our other advisory services.


    FRIDAY 14 MAY 2021

    China’s inflation pressures build as producer prices rise

    China’s inflation pressures could be building as data released this week showed a 6.8 per cent year-on-year increase in producer prices. This is the quickest pace of producer price inflation in more than three years, and follows deflationary figures in 2020, when the pandemic stifled demand. However, despite the increase, consumer price inflation has remained subdued; China’s recently-released consumer price index showed a smaller increase of 0.9 per cent year-on-year. This week’s figures also indicate that demand for commodities, particularly for oil and copper which account for a large share of China’s producer price index, is currently strong, suggesting that China’s economic recovery is being driven, in part, by strong demand in its industrial sector.

    South Korea unveils US$451 billion plan to boost semiconductor industry

    South Korea’s Ministry of Trade, Industry and Energy announced moves to strengthen its semiconductor industry this week, with plans for research and development tax credits and new investments in facilities. The development is part of a strategy aimed at securing core technologies, the ministry said, and comes amid a global microchip shortage that is disrupting a range of sectors worldwide. South Korea will spend US$451 billion to create a ‘semiconductor powerhouse’ over the next decade, with the funds coming from government packages, tax incentives, and investments from companies including Samsung Electronics Co. and SK Hynix Inc.

    UAE moves to bolster free zone competitiveness

    In the latest move by the UAE to make its free zones more competitive and attract greater foreign business, Abu Dhabi established a new council this week to shape regulations governing the emirate’s free zones. The Free Zone Council will be led by chairman of the Abu Dhabi Department of Economic Development, Mohammed Al Shorafa, and is mandated to liaise between Abu Dhabi’s free zones and formulate proposals that will support their growth. The move follows Dubai’s issuing on 6 May of a new law allowing companies within the Dubai International Financial Centre (DIFC) to market themselves and their products outside the free zone. The new law also widens DIFC’s remit to promote inward investment into Dubai and fuel its economic growth. The number of companies within UAE free zones grew by 4.4 per cent between February 2020 and February 2021, with Dubai Multi Commodities Centre (DMCC) announcing a record April in terms of attracting new business, with 216 new firms joining the free zone. The UAE’s renewed focus on attracting foreign businesses comes as Saudi Arabia also announces incentives, such as a fifty-year tax break and exemptions from Saudization quotas, for companies that establish a regional HQ in Saudi Arabia.

    Taiwan outlines US$7.5 billion stimulus package

    The Taiwanese government on Thursday proposed a spending injection of US$7.5 billion aimed at mitigating the ongoing economic impact of the coronavirus pandemic. It comes amid a sharp increase in domestic COVID-19 infections. On Wednesday, the country reported 16 new domestic cases, marking a record daily high; overall, Taiwan has reported around 1,200 cases, the majority of which have been imported. The recent spike in cases will likely cause concern among market and government officials – already reflected by a drop in the benchmark stock index, which fell by 1.5 per cent following the release of Wednesday’s daily case figures. The stimulus package will now be submitted for parliamentary approval.

    Turkey’s foreign minister visits Riyadh in bid to mend ties

    Turkey’s foreign minister Mevlut Cavusoglu visited Saudi Arabia on 10 May in a bid to mend Turkish-Saudi ties after relations soured following the murder of Saudi journalist Jamal Khashoggi in Istanbul in 2018 and disagreements over regional affairs. The first high-level visit by a Turkish official since 2017 comes as Turkey’s economy continues to struggle with high inflation and a depreciating currency. Saudi newspaper Arab News reported that Cavusoglu would discuss the lifting of an unofficial boycott by Saudi Arabia on Turkish goods, which has caused a 94 per cent drop in Turkish exports to Saudi Arabia. A press release by Turkey’s Ministry of Foreign Affairs following a meeting between Cavusoglu and Saudi Foreign Minister Prince Faisal bin Farhan stated that Turkey and Saudi Arabia would continue dialogue.


    Sri Lanka to release next monetary policy review: The Monetary Board of the Central Bank of Sri Lanka will meet on 20 May.

    The Organisation of Islamic Cooperation (OIC) to hold emergency meeting on 16 May: Foreign ministers of OIC nations will discuss the developing situation in Jerusalem and Gaza.


    CHINA: The World Health Organization (WHO) has granted emergency approval for China’s Sinopharm vaccine. Sinopharm will now be added to the WHO’s vaccine procurement programme COVAX.

    HONG KONG: Government launches “vaccine bubble” scheme to allow entertainment and leisure establishments to reopen to vaccinated customers; COVID measures eased for fully vaccinated residents.

    INDIA: On Saturday 8 May, a record 4,187 deaths were recorded in India; calls grow on India’s government to impose a national lockdown as the country faces a continued surge in cases and shortages in oxygen and hospital beds.

    AUSTRALIA: A record 402,000 vaccine doses were administered last week, but based on current rates, Australia’s adult population will not be fully vaccinated until 2023.

    THAILAND: A closure order in Bangkok to shut down schools, entertainment venues, and parks has been extended until 17 May.


    These COVID-19 insights are taken from Asia House Advisory’s focused monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please reach out to advisory@asiahouse.co.uk for further details on this and our other advisory services.


    FRIDAY 7 MAY 2021


    UK and India set out ‘roadmap’ for deeper economic ties

    India and the UK have agreed a raft of trade and investment deals worth £1 billion following a virtual summit between Prime Ministers Boris Johnson and Narendra Modi. A ‘roadmap’ was also published during the summit, which outlines an ambition to double bilateral trade by 2030 and work towards a UK-India free trade deal. With the UK refocusing its engagement with Asia, as outlined in the recent Integrated Review, it is clear that India is emerging as a priority market for Britain, with Johnson previously describing the country as “an increasingly indispensable partner for the United Kingdom.”

    The UK High Commissioner to India, Alex Ellis, will brief Asia House Corporate Members on UK-India relations on 13 May. Find out more.

    China cuts trade dialogue with Australia following BRI cancellations

    In the latest escalation of tensions between Australia and China, Beijing has ‘indefinitely’ suspended participation in a key bilateral channel, the Australia-China Strategic Economic Dialogue. A statement by China’s National Development Reform Commission said the decision follows moves by Australian officials ‘to disrupt the normal exchanges and cooperation between China and Australia out of Cold War mindset and ideological discrimination’ – a likely reference to Australia’s federal government cancelling two Belt and Road projects in Victoria last month. Australia’s Trade Minister Dan Tehan expressed disappointment in the decision, describing the dialogue as “an important forum for Australia and China to work through issues relevant to our economic partnership”.

    Aramco profits soar as global oil prices rise

    Saudi Arabia’s state-owned oil company, Aramco, this week saw Q1 profits rise by 30 per cent year-on-year, to US$21.7 billion. Aramco has benefited from rising oil prices, with Brent Crude gaining more than 30 per cent in 2021 to reach heights of US$70 per barrel. Global demand for oil has increased as countries roll out mass vaccination campaigns, social restrictions begin to ease, and OPEC producers led by Saudi Arabia maintain supply cuts. Aramco announced it will keep its quarterly dividend at US$18.8 billion, which will be paid in the second quarter. Most of this will go to the Saudi government which owns roughly 98 per cent of Aramco shares. The positive results for Aramco will help Saudi Arabia further reduce its budget deficit, which narrowed to US$1.97 billion in Q1 2021, and come just as Saudi Arabia appoints former head of Aramco’s mergers and acquisitions group, Faisal Alibrahim, as the country’s Economy and Planning Minister.

    HRH Prince Khalid bin Bandar bin Sultan, Saudi Ambassador to the UK, will brief Asia House Corporate Members on the Kingdom’s economic outlook on 25 May. Find out more.

    Indonesia sees fourth consecutive GDP contraction as new investment ministry launched

    Indonesia’s economy shrank by 0.7 per cent year-on-year in Q1, marking the country’s fourth consecutive quarterly contraction as it struggles with the ongoing COVID-19 crisis. However, the pace of the slowdown seems to be easing, with the Q1 results showing an improvement on the 2.19 per cent contraction seen in the previous quarter. A key factor in the slowdown is a slump in household spending. The GDP data comes a week after Indonesia’s President Joko Widodo unveiled plans for a new Investment Ministry during his second cabinet reshuffle in four months. The new ministry will handle both foreign and domestic investments with an added focus on SMEs, and aims to improve the investment environment across the country. Investment Coordinating Board (BKPM) Head Bahlil Lahadalia has been appointed to lead the new Ministry alongside his BKPM brief.

    Israeli traders gain access to UAE commodities markets

    On Sunday 2 May, The Dubai Gold and Commodities Exchange (DGCX) received a permit from the Israel Securities Authority to open up DGCX’s services to the Israeli market. Israeli companies can now become members of the Middle East’s largest derivatives exchange and use DGCX trading services, which include various Futures and Options Contracts covering precious metals, energy, equities, and currency. In 2020, DGCX reported a trading volume of 12.73 million contracts, representing US$320 billion. This is the latest sign of closer UAE-Israel economic cooperation developing out of the normalisation of relations between the two countries last year.

    New UAE citizenship laws take effect as ex-pats receive passports

    UAE passports have started being issued to senior ex-pat professionals as major changes to the UAE’s citizenship laws take effect. Passports have reportedly been given to several business leaders, including the founders of successful Emirati start-ups, Careem – a rival to Uber – and e-commerce group Souq.com, as well as the leadership of Emirati airliners, Etihad and Emirates. The new measures announced in January 2021 offer talented professionals a pathway to citizenship, making the UAE economy more competitive compared to its Gulf neighbours and reducing the number of ex-pats who take their experience, talent, and investments out of the country once their employment ends. Passports also offer ex-pat professionals certain advantages, such as the ability to buy assets outside the UAE’s various free zones and travel to other GCC countries without a visa.



    Australia to outline new climate agency: The Australian government is expected to use next week’s budget to announce a new agency aimed at improving resilience and managing climate risks.


    INDIA: Record daily COVID-19 infections were recorded this week, with health experts predicting that the daily case number could soon reach 500,000 a day; a growing shortage of hospital beds and oxygen supplies has spurred action from the UK, US and European Union, all of which have pledged to commit emergency medical supplies.

    JAPAN: Government reported an all-time high number of patients with severe symptoms as its healthcare system struggles under a new wave; Government plans to set up large-scale vaccination centres in Tokyo and Osaka by 24 May to address Japan’s slow rollout

    AUSTRALIA: Government announces residents and citizens will be banned from entering Australia from India. Some 9,000 Australians are currently in India. The government will reconsider restrictions on 15 May.

    SINGAPORE: Certain social distancing restrictions introduced as cases rise. Social gatherings are now restricted to five people, workplaces are only allowed to operate with 50 per cent of staff, and gyms are closed. From Friday, inbound travellers except from Australia, Brunei, China, New Zealand, Taiwan, Hong Kong, and Macau will have to quarantine for three weeks upon arrival in Singapore; Singapore saw its first COVID-19 fatality in nearly two months over the weekend.

    UAE: Quarantine time for vaccinated travellers arriving from countries that are not on the UAE’s ‘green list’ has been cut to five days. Travellers are still required to take a PCR test on arrival, followed by another PCR test four days after arrival; the UAE’s Federal Competitiveness and Statistics Center released preliminary data showing the UAE’s economy contracted by 6.1 per cent in 2020; UAE records 1,699 new cases on 4 May, the lowest number since 3 January.


    These COVID-19 insights are taken from Asia House Advisory’s focused monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please reach out to Ed Ratcliffe, Head of Advisory, at ed.ratcliffe@asiahouse.co.uk for further details on this and our other advisory services.