SFC Outlook 2026｜Dong He: Strong Integration Holds the Key to Regional Resil...

By Li Yinong, SFC, 21st Century Business Herald

Editor’s Note:

As the world moves toward 2026, multiple economic cycles and structural shifts are converging. Global growth remains uneven, inflation and monetary policy paths are uncertain, and geopolitical tensions and industrial realignments continue to reshape the international order. At the same time, China enters the starting phase of 15th Five-Year Plan, with implications that extend well beyond its borders.

SFC Outlook 2026: Global Crossroadsbrings together distinguished economists, scholars, investors and political figures to assess the global economy, financial markets, the evolving world order, and China’s development at this critical juncture. Through in-depth conversations and forward-looking perspectives, the series offers a comprehensive outlook on the forces shaping the years ahead.

The ASEAN+3 region is navigating a complex global economic environment, marked by trade uncertainties, rising geopolitical tensions, and the rapid emergence of artificial intelligence. In 2025, despite concerns over U.S. tariffs and fragmented global supply chains, the region has demonstrated remarkable resilience, supported by strong investment flows, technological innovation, and sound policy frameworks.

Dong He, Chief Economist at the ASEAN+3 Macroeconomic Research Office (AMRO), shared his insights in an exclusive interview with SFC reporter. He noted that the region’s performance this year reflects both the strength of its financial systems and the strategic benefits of regional integration. From robust exports in semiconductors and AI-related products to proactive fiscal and monetary policies, ASEAN+3 economies have managed to balance risks and opportunities effectively.

He emphasized that resilience is built not only through economic buffers and institutional arrangements, but also through investment-driven integration and broader production networks, particularly in partnership with China. Looking ahead, Dong highlighted the critical importance of plurilateral cooperation, sustained productivity growth, and inclusive development to strengthen the region’s resilience and secure long-term growth prospects in 2026 and beyond.

ASEAN+3 Economies Have Held Up Well

SFC Markets and Finance: Overall, has economic growth in the ASEAN+3 region this year met your expectations?

Dong He: Actually, the region as a whole held up extremely well, and we have upgraded forecasts compared to early in the year. Of course, there were lots of worries when the U.S. administration introduced high tariffs against the region's exports. I think two forces have been at work.

On the negative side, there are high uncertainties on trade tariffs and the rounds of negotiations. But on the positive side, there has been very strong AI-related investment going on globally. Exports related to semiconductors and AI-related products have been growing at more than 20%. As you know, Asia is very much at the center of that export trade, so the economies have been able to benefit from that.

These opposing forces have been at work, but overall, these economies have been doing well. And of course, policies have also supported them: half of the central banks lowered interest rates, and fiscal policy also provided targeted support.

Overall,the region is doing reasonably well, but we still have to be prepared for continued uncertainty, and recently there have also been concerns about AI-related risks, whether there have been over investments. But I think we are still at a reasonably early stage, and there will still be room for growth in AI-related investments.

Trade Policy Uncertainty Remains a Long-Term Challenge

SFC Markets and Finance: Speaking of trade policy, do you think the period of the greatest uncertainty has passed?

Dong He: If you look at the index for trade policy uncertainty, it has certainly come down from the peak, and many of the ASEAN economies, as well as Korea and Japan, have reached some sort of agreements with the U.S. But I don't think one should be complacent. These uncertainties will still be with us for quite some time to come.

To some extent, I think it depends on the political developments within the U.S. itself. I think that the administration has proven to the world that it can change policies quite quickly. So I think these uncertainties will be with us for quite some time to come.

China’s Growing Role Creates Opportunities for ASEAN+3 Economies

SFC Markets and Finance: So far, how well do you think ASEAN+3 has handled the challenge of fragmentation?

Dong He: The concept of resilience is that you build up“buffers”and have institutional arrangements that would put the economy in a good position when shocks happen, such as very high tariffs.

The region did really well in the last round of monetary policy tightening. Remember that inflation went to very high levels during 2021 and 2022, and the major central banks hiked interest rates very aggressively.The region actually did pretty well. I think that's already a sign that the financial systems in the region have fairly good buffers.

And this time round, I think the region is also talking very actively. I think it's going to be a process. But one bright spot is that, for example, China has been climbing up the innovation ladder. It's at the forefront of many technological developments, in green technology, for example, EVs and others. These would provide very good opportunities for ASEAN to benefit.

So it's going to be an FDI-led integration. I think it's going to be wider, more integrated production networks in ASEAN, and Chinese enterprises should seriously think about how to invest in these economies, to contribute to their local economies, to train local workers, and to transfer technology. That's going to put them on a much sounder footing. So that's a very important aspect when we think about trade integration in the future.

SFC Markets and Finance: To elaborate on that, what do you see as the next key areas for ASEAN+3 collaboration?

Dong He: Collaboration has always been there, but I think investment-driven economic integration is a very important area. Of course, there are still some non-tariff barriers existing among Asian countries and ASEAN countries, and those should be lowered and removed eventually, hopefully. On the tariff side, it’s already zero tariff for intra-ASEAN trade.

There could also be vulnerabilities, which is why we are hoping to strengthen the regional financial safety net. The Chiang Mai Initiative Multilateralization itself has been set up to facilitate financial integration, and AMRO is the surveillance arm of this financial safety net. We are doing a lot of work to strengthen this process.

SFC Markets and Finance: How do you see China’s role in regional cooperation in recent years? Looking ahead to China’s 15th Five-Year Plan, with ongoing innovation and financial opening, what opportunities might this create for ASEAN+3 economies?

Dong He: China is already the second largest economy. It’s a $19 trillion economy, and it’s also the largest trading nation. It is a very important source of supply, and its exports are highly competitive.

But in the future, for China to be a very strong economy, it should aim to become the largest source of imports, in the sense that it is the destination for many exports from the region. That would position the Chinese economy very well.

So, in order for Chinese imports from other parts of the world to be a good contributor, I think domestic demand in China has to be put on a much stronger footing, particularly consumption, especially household consumption. To achieve that, we need to strengthen social security, and also ensure that household income continues to grow and real wages keep rising.

That is what is really important for the Chinese economy to continue being a very important player globally.

AI Investment Will Boost Long-Term Productivity

SFC Markets and Finance: Do you see the AI boom as primarily a growth driver or a disruptive force for ASEAN+3 economies and investment?

Dong He: I think in the longer term, AI is certainlygoing to be a boost for productivity growth. As I mentioned in the panel, AI-related investments are quite strong. We have seen FDI commitments or applications in data centers and other related facilities growing at more than 20%–30%. And if those commitments are materialized, we are going to see higher private investment in the period ahead.

We also need to differentiate between some frauds in financial markets or AI-related investments and real investment. We must distinguish these two, even if there is some correction in financial markets. In the longer run, AI-related investments will be beneficial.

But what is important from a financial stability point of view is that we don’t want to see very high leverage, or leverage being built up in booming times, especially if many of these investments are financed by high leverage. Regulators should be quite concerned, because if there are corrections in the financial markets, leverage becomes binding, and that would be very detrimental to financial stability.

In the longer term, I think these are very positive developments, but in the short term, we also need to manage the risks.

Plurilateral CooperationisKey for 2026 and Beyond

SFC Markets and Finance: As 2025 draws to a close, looking ahead to 2026 and beyond, how do you view growth prospects for ASEAN+3? And what do you see as the key opportunities?

Dong He: This is a world that’s prone to shocks, and we have also seen signs of fragmentation. I think in the region, there are very strong forces that believe integration will be the way to strengthen resilience. So I think 2026 will be a very crucial year for the region, to really strengthen integration efforts and to enhance resilience.

I think a practical approach, or what I have called plurilateralism, involves groupings of countries—like-minded countries or coalitions of the willing—working together to pursue certain policy objectives. And hopefully we are not going to end up with blocks of countries that do not talk to each other. We think this is really important to underpin the growth prospects.

There are still a lot of people with low incomes in the region. We need to see sustained productivity and real wage growth to ensure the welfare of the people in the region. So it’s very important to keep growth going.

Chief Producer: Zhao Haijian

Supervising Producer: Shi Shi

Editor: Li Yinong

Reporter: Li Yinong

Video Editor: Cai Yutian

Poster Design：Lin Junming

New Media Coordination: Ding Qingyun, Zeng Tingfang, Lai Xi, Huang Daxun

Overseas Operations Supervising Producer: Huang Yanshu

Overseas Content Coordinator: Huang Zihao

Overseas Operations Editors: Zhuang Huan, Wu Wanjie, Long Lihua, Zheng Quanyi

Produced by: Southern Finance Media Gorp.