Asia in the “G2” world A delicate balancing act

Research evidence excerpt

Asia in the “G2” world A delicate balancing act

14 May 2026

Asia in the “G2” world EconomicsAsia

A delicate balancing act

◆ The shift from a rules-based world order to a more multipolar Justin Feng

system presents major challenges for trade-dependent Asia Economist, Asia

The Hongkong and Shanghai Banking Corporation Limited

justin.feng@hsbc.com.hk

◆ Asia increasingly relies on China for trade and new FDI, but +852 22887108

US retains an edge in global finance and research/education Frederic Neumann

Chief Asia Economist, Co-head Global Research Asia

◆ Some middle powers in ASEAN have managed to navigate fredericneumann@hsbc.com.hk

geopolitical storms and attract diversified investment +852 2822 4556

The shifting world order

The Trump-Xi summit in Beijing on 14-15 May could prove to be a defining test for

what President Trump has called the world’s “G2”. From an economic perspective,

the picture might be closer to a “G3” (the US, EU, and China), which makes up 60%

of global GDP. Labels aside, the world is clearly moving from the unipolar period that

followed the Cold War to a more volatile and contested multipolar system.

This report examines how economies in Asia can navigate this shift in terms of trade

flows, foreign direct investment (FDI), and global finance.

Asia’s economic exposure to the “G2”

A practical starting point is to assess each economy’s exposure to the major powers.

Most export-driven Asian economies are becoming more reliant on China, particularly

for imported intermediate components. China’s influence is especially pronounced in

ASEAN – now its largest export destination – and its investment footprint is notably

strong in Vietnam, Thailand, Malaysia, and Indonesia.

That said, China’s FDI stock across Asia remains lower than what the US and EU