Overview
Zayna Dembinski is an analyst with Steptoe’s Global Strategic Engagement Team with a focus on US foreign policy and Asia-Pacific geopolitics. Zayna provides forward-looking analysis on domestic and geopolitical developments for international clients, providing assessments and key takeaways to guide strategic decisions and stakeholder engagement plans. She speaks and researches in Urdu.
Zayna sat down with Stepwise Editor-in-Chief Anni Coonan to discuss her take on ongoing developments in Asia-Pacific.
What are the most important issues to watch ahead of the September summit between Presidents Xi Jinping and Donald Trump? Are there less visible areas of competition that could shape the relationship going forward?
Two leader-level summits later, the fragile US-China trade truce reached in Busan remains intact, yet it appears increasingly unsustainable ahead of September’s meeting. The period of relative stability after Busan quickly came and went, with strategic competition once again defining the bilateral relationship. Rather than relying primarily on broad tariff escalation this time, Washington has turned to more targeted economic and national security tools that allow it to exert pressure on Beijing while avoiding the disruption associated with across-the-board tariffs. This includes expanding restrictions on Chinese tech and defense-linked entities, imposing relatively modest—but diplomatically significant—tariffs tied to forced labor concerns and sanctioning Chinese entities for facilitating sanctions evasion. China, for its part, has demonstrated a greater willingness and capacity to respond to new US trade measures. Beijing increasingly leverages its more muscular economic security toolkit to launch more targeted and precise countermeasures, while also continuing to wield its dominance in critical mineral supply chains as a source of leverage. I believe this renewed escalation leading into September mirrors a lot of what we saw before last year’s Busan summit, suggesting both sides are again trying to gain leverage ahead of negotiations. However, much like 2025’s tariff cycle, I think the current pattern of reciprocal measures leaves little room for miscalculation from either side.
Against this backdrop, in my opinion the key question heading into September is whether the summit produces concrete deliverables that are followed by action. Businesses have grown increasingly skeptical about whether these leader-level engagements will actually translate into greater policy predictability or just go down as another round of talks with divergent narratives. This makes concrete outcomes far more meaningful than broad commitments to improve relations or maintain “strategic stability.” Such outcomes could include extending the trade truce, easing select export restrictions, or establishing clearer guardrails around technology competition. In my view, AI is the key issue to watch. With both governments increasingly viewing AI as a strategic technology—and with AI continuing to dominate headlines, investor attention and market expectations —the first bilateral AI dialogue in early September and any new restrictions announced in the lead-up to the summit could really shape the tone of the next leader-to-leader meeting as much as tariffs or trade. With both leaders facing domestic incentives to demonstrate economic stability and a win—Trump ahead of the midterms and Xi as Beijing works to sustain economic growth—there remains space for limited agreements. The broader strategic rivalry, however, to me seems unlikely to ease.
India has positioned itself as a key partner for the US and Europe while maintaining longstanding economic and strategic ties with Russia. How do you see India balancing these relationships as it seeks to expand its global role, and what political and economic trends should businesses be watching?
Multi-alignment has become a defining feature of India’s foreign policy since the end of the Cold War, shifting from its earlier non-aligned posture to one that allows New Delhi to actively build partnerships across competing geopolitical blocs based on pragmatic, issue-based interests. Rather than viewing partnerships with the US, Europe and Russia as contradictory, India has sought to maximize flexibility: working closely with Washington and European partners on Indo-Pacific security, trade and technology while maintaining its longstanding defense and energy ties with Moscow. New Delhi’s multi-alignment strategy has played a central role in India’s rise as an emerging global power and supporting Prime Minister Narendra Modi’s ambition to transform the country into a developed nation under the “Viksit Bharat” vision by 2047.
But that same strategy is also a source of uncertainty, especially for businesses navigating an increasingly fragmented geopolitical environment. India’s continued ties with Russia expose its firms to sanctions and broader compliance risks, particularly as Washington and its partners seek to apply pressure on Russia’s major trade and economic partners. President Trump’s decision last year to impose an additional 25% tariff on India over continued purchases of Russian oil highlighted the limits of the US-India strategic partnership when geopolitical priorities diverge, even if their broader objectives remain aligned. India’s longstanding defense relationship with Russia also creates vulnerabilities, especially as New Delhi seeks to position itself as a defense supplier in the Asia-Pacific, where regional customers would have to weigh concerns over sanctions exposure and reliance on Russian-origin components.
Nonetheless, I believe Prime Minister Modi is unlikely to pivot from New Delhi’s multi-alignment strategy, particularly if it comes at the expense of its ties with Moscow. Russia is unlikely to lose its strategic importance to India anytime soon. Bilateral trade reached a record US$68.69 billion in FY2025-26 as India continues to rely on Russia for discounted crude oil, military equipment, nuclear energy and fertilizers, among other goods. Those structural ties would make a significant shift away from Moscow both politically and economically difficult, even as New Delhi deepens engagement with the West. India’s multi-alignment strategy has been central to its rise, but I believe preserving strategic that autonomy will become increasingly costly as geopolitical competition hardens. Businesses should expect New Delhi to continue in its course of balancing across competing blocs rather than choosing sides.
Recent developments under Indonesian President Prabowo Subianto have raised questions about the country’s trajectory. What are the key trends to watch, and do recent challenges reflect short-term turbulence or deeper structural issues?
As Southeast Asia’s largest economy, recent developments in Indonesia have reinforced longstanding questions over President Prabowo Subianto’s economic agenda and the resilience of the country’s institutional guardrails. While its economy remains relatively strong, with GDP growing 5.29% in Q2 compared to the year before, the quality and durability of this growth remain questionable. Moreover, the credibility of headline growth figures has come under increasing scrutiny. Concerns that official GDP numbers may not fully capture weaker household consumption trends have intensified debate over whether achieving Prabowo’s 8% growth target is really what is driving the focus on headline indicators rather than underlying economic health. With heavy reliance on government spending to fuel this growth, I am left with a major question mark over whether Jakarta can actually spark lasting private-sector expansion.
The key trend to watch will be whether Indonesia can sustain higher growth without compromising fiscal discipline, particularly as spending commitments continue to expand.
Politically, all eyes are on signs of Jakarta's expanding state intervention and weakening institutional independence. The move to greater state control over strategic commodity exports, alongside concerns over the independence of Bank Indonesia and governance issues surrounding the free meals program, have fueled perceptions of growing policy unpredictability. The weak IPO market, MSCI’s warning over market transparency and persistent capital outflows suggest investor confidence is yet to fully recover. At the same time, Prabowo’s government has emphasized transparency and regulatory reforms aimed at improving Indonesia’s business environment, creating the possibility that current investor concerns would ease if reforms translate into stronger institutional credibility. In my view, the ultimate test of this credibility will be the MSCI's verdict in November to determine whether Jakarta has done enough on transparency reforms to not be knocked down from emerging market (EM) to frontier market (FM) status. A downgrade could trigger up to $13 billion in total capital outflows, serving a major blow across the entire economy.
While external factors have contributed to recent turbulence, persistent rupiah weakness and investor concerns, I believe the challenges Indonesia faces today are not purely cyclical. Prabowo’s more interventionist approach represents a longer-term shift that will continue to weigh on Indonesia’s investment climate and institutional credibility.
