Asia Communique
Beidaihe Talks Begin Behind Doors | China–Russia Navy Drills Escalate | India Faces Heat on Russia Crude
Asia Morning Brief
India under pressure over Russian oil
Donald Trump’s return to the political spotlight is already rattling energy diplomacy. After promising a tougher stance on “Russia’s oil trade proxies,” Trump’s campaign warned that if elected, his administration would impose a 25% tariff on countries importing Russian crude — a move widely seen as aimed at India and China. Within hours, U.S. deputy chief of staff Stephen Miller accused India of “effectively financing” Russia’s war in Ukraine by maintaining high volumes of discounted imports.
India has emerged as Russia’s top oil customer, even surpassing China in recent months. According to shipping data, Indian refiners imported over 1.8 million barrels per day of Russian crude in July — a staggering 40% of total imports. The trade is legal and dollar-denominated, but Washington sees it as undermining sanctions and helping to stabilize Russia’s wartime economy.
New Delhi has pushed back. Indian officials framed the purchases as purely economic, noting that Europe continues to buy refined fuels made from Russian crude. “We are not violating any international sanctions,” said one senior energy official. “Our energy security will not be held hostage to U.S. election cycles.”
Still, Trump’s threat introduces real risk. A 25% tariff could hit Indian exports of petroleum products to the U.S., currently valued at over $4 billion annually. It may also dampen investor confidence in Indian refiners like Reliance and IOC, which have built entire supply chains around Russian barrels.
Strategically, India is unlikely to fold. The oil deal has helped anchor deeper India–Russia ties, from discounted fertilizer shipments to military spare parts. But the optics of aligning too closely with Moscow, especially under a potential second Trump presidency, may force Modi’s government to rebalance diplomatically — or find creative workarounds to keep the oil flowing.
Economic headwinds: markets, energy and trade
Weak U.S. jobs data hits Asian markets. Asian equities tracked Wall Street lower after a lackluster U.S. payrolls report, fueling expectations that the Federal Reserve will cut rates. Japan’s Nikkei fell 2.1%, South Korea’s KOSPI slipped 0.2%, and two-year U.S. Treasury yields fell to 4.67%. The U.S. dollar weakened as investors bet on policy easing, and Brent crude eased amid news that OPEC+ will boost supply.
OPEC+ unwinds its production cuts. Eight OPEC+ countries agreed to raise oil output by 547,000 barrels per day in September, accelerating the reversal of voluntary cuts. Including earlier increases, about 2.5 million bpd, or 2.4% of global demand, will return to the market. The decision comes amid U.S. pressure on India to curb Russian oil purchases and ahead of another meeting on September 7. Analysts say the group is reclaiming market share while watching how sanctions reshape flows.
India under fire for Russian oil imports. U.S. Deputy Chief of Staff Stephen Miller accused India of “effectively financing” Russia’s war by buying its oil. He noted that India’s purchases now rival China’s and warned of potential 25% tariffs on countries buying Russian crude. Indian officials responded that they will continue purchasing from Moscow despite U.S. threats.
China’s independents elbow into Iraq. Smaller Chinese oil companies are ramping up investment in Iraq, challenging state majors. United Energy Group already produces around 120,000 bpd and recently won exploration licenses in the Fao block. Zhongman Petroleum is spending US$481 million to explore East Baghdad (North) and Middle Euphrates. Geo‑Jade Petroleum heads a consortium aiming to develop South Basra and build a refinery, starting with 10,000 bpd at the Huwaiza field. These deals underscore Beijing’s quest for long-term energy security.
Singapore sovereign fund buys into European telecom. The Financial Times reports that GIC will take a 25% stake in a fiber-optic broadband venture between MasOrange and Vodafone Spain. The investment, valued at about €1.4 billion, is expected to be announced today and illustrates Singapore’s appetite for infrastructure assets.
China’s Annual Beidaihe Meeting Begins
Every year in August, China’s top leadership gather for a secretive conclave at the beach town of Beidaihe in Hebei province. The annual conference is often seen as an event where top leadership have traditionally engaged in bargaining for influence within the Chinese Communist Party. But since Xi Jinping’s rise to near absolute power, the conference has lost its past relevance.
We have heard some rumors about challenge to Xi’s authority following the purge of the top military leadership. However, recent events have led some to believe there is some type of internal challenge to Xi’s authority. Therefore, many China watchers will pay attention to this year’s Beidaihe conference to see if there is any significant curtailing of Xi’s authority. I personally don’t think Xi Jinping is being directly challenged but instead there appears to be delegation of duties to individuals like Cai Qi to reduce the burden on Xi.
Chinese state media on Sunday published an article which says Cai Qi, a member of the Standing Committee of the Political Bureau of the CPC Central Committee, held an annual invitation-only meeting with Chinese experts at Beidaihe. Historically, the announcement of this meeting with experts has followed by the gathering of Chinese leaders for the Beidaihe conference.
We are likely to see more delegation of tasks by Xi as the bureaucratic pressure takes toll.
Diplomacy and security
China–Russia naval drills expand maritime coordination. Russian and Chinese forces have launched the “Maritime Interaction‑2025” naval exercises in the Sea of Japan. A joint flotilla consisting of a Russian anti-submarine ship, two Chinese destroyers and diesel-electric submarines will practice artillery firing, anti-submarine warfare, air defense and search-and-rescue operations. The drills were planned before President Trump ordered two U.S. nuclear submarines to deploy to the area, but the timing highlights heightened geopolitical tension around the Korean Peninsula. Moscow and Beijing say the exercises improve coordination and deter adversaries.
Iran creates a National Defense Council. Tehran’s Supreme National Security Council has approved a new body to centralize defense planning after June’s brief air war with Israel. The council, chaired by President Masoud Pezeshkian, includes the heads of all three branches of government. Iran’s army chief warned that threats from Israel persist and urged vigilance.
Commodities and resources
Palm-oil crunch on the horizon. A Reuters investigation warns that combined palm-oil exports from Indonesia and Malaysia—which supply 85% of the world’s palm oil—could decline 20% by 2030 due to aging trees and farmers. Many smallholders are reluctant to replant because new palms take three to five years to bear fruit, and more than half of Malaysia’s smallholder plantations are already past peak production. With global demand forecast to jump by 50 million tons by 2050, analysts warn of tighter supplies and higher prices.
Snapshot of the week ahead
Look Ahead: August 5–9
Thailand–Cambodia talks move to neutral ground
A high-stakes General Border Committee meeting opens Monday in Malaysia as Thailand and Cambodia seek to deescalate their worst border clash in over a decade. The talks follow last week’s cease-fire and will run through Thursday, with the U.S., China, and Malaysia attending as observers on the final day. Thailand reportedly requested the venue be moved from Phnom Penh.
Marcos heads to India as ties deepen
Philippine President Ferdinand Marcos Jr. is in India for his first state visit, aiming to boost strategic and economic cooperation. The five-day trip comes on the heels of the countries’ first-ever joint maritime exercises near the South China Sea — a pointed signal amid shared tensions with Beijing.
Singapore tycoon to plead guilty in graft case
Property mogul Ong Beng Seng is expected to plead guilty Monday in a corruption case tied to former transport minister S. Iswaran, who recently completed a one-year jail term. The scandal continues to ripple through Singapore’s political and business elite.
Auto earnings face Trump tariff test
Japanese automakers brace for scrutiny as Mazda (Tuesday), Honda (Wednesday), and Toyota (Thursday) report earnings. Investors are watching for signs of impact from the 25% U.S. auto tariff imposed in April. SoftBank also reports Tuesday, and Sony follows on Thursday.
India holds rates but shifts stance
The Reserve Bank of India is expected to keep rates unchanged at its Wednesday meeting, after signaling a cautious pivot back to a neutral stance in June. A 100 bp easing cycle appears to be on pause as inflation data and global headwinds reshape outlooks.
Philippine Senate weighs Duterte trial
In Manila, senators meet Wednesday to decide whether to proceed with Vice President Sara Duterte’s impeachment. The move highlights persistent rifts between the Duterte and Marcos factions, and could intensify political volatility.
Hiroshima marks 80 years since bombing
Japan commemorates the Hiroshima bombing on Wednesday amid rising nuclear anxieties. This year’s memorial comes weeks after joint U.S.-Israeli strikes on Iran and ongoing Russian threats in Ukraine. Survivors continue their global campaign against nuclear weapons.
Data dump: GDP, inflation, trade
A flurry of economic data drops this week:
Singapore retail sales (Tuesday)
Vietnam inflation, trade, and industrial output (Wednesday)
Philippines Q2 GDP (Thursday)
China’s robot ambitions on display
Beijing opens its flagship robot expo Friday, with more than 1,500 exhibits and a strong focus on humanoid robotics. Over 50 manufacturers will showcase how China is betting big on AI and automation as it seeks to leap ahead in high-tech manufacturing.
Joshua Wong returns to court
Democracy activist Joshua Wong faces trial again Friday under Hong Kong’s national security law. Already serving nearly five years, Wong could face a life sentence if convicted of colluding with foreign forces — a charge tied to the 2020 pro-democracy protests.