EAI-ISAS Closed-Door Workshop (8 September, 2025)

The East Asian Institute (EAI) and the Institute of South Asian Studies (ISAS) at the National University of Singapore on 8 September 2025 organised a closed-door workshop involving approximately 50 policymakers as well as representatives from the private sector. This followed a public session in the morning which featured Singapore’s Minister of State for Trade & Industry and National Development Alvin Tan as guest-of-honour.

The workshop, comprised of two panel discussions, provided a strategic assessment of China and India’s efforts in driving domestic reforms in areas such as industrial upgrading and digital finance and discussed both countries’ progress in advancing innovations in central bank digital currencies and payment systems.

Programme

Workshop Stage-Setting

Panel 1: Economic Prospects for China and India: Growth, Trade, and Investment

Panel 2: Central Bank Digital Currencies, Payment Systems and Global Governance

Main Topics of Discussion

Panel 1: Economic Prospects for China and India: Growth, Trade, and Investment

China and India are navigating a fluid global environment marked by tariff shocks, supply‑chain reconfiguration, and rapid technological change. Both economies retain significant strengths, yet face distinct domestic constraints and external headwinds. This summary distils the discussion into core themes—macroeconomic momentum, trade dynamics, investment flows, digital finance, regional context, and reform priorities—focusing on practical implications for policy and business.

1. Global Flux and Domestic Setting

The international order is in transition. Trade frictions and parallel technology regimes are pushing firms to diversify production and reinforce supply chains. For both countries, external shifts are unfolding alongside domestic reform agendas and fast‑moving advances in manufacturing, digital platforms, and financial technology. The strategic task is to capture efficiency gains from openness while managing security, resilience, and inclusion.

2. India: Momentum, Tariff Shock, and Reform Inflection

Post‑pandemic growth has been robust, with broad‑based contributions from manufacturing, services, and agriculture. Festive‑season demand supports near‑term activity, but tariff shocks are likely to bite in the second half of the fiscal year. Labour‑intensive, MSME‑heavy export segments—such as textiles, gems and jewellery, leather, and marine products—face margin squeeze, order losses, and employment risks. Policy support via working‑capital and term loans can cushion the impact. Medium term, diversification of markets and the economy’s demand‑driven character suggest a temporary rather than structural hit. A reform inflection is likely: deregulation as low‑hanging fruit, with more politically complex labour, land, and agricultural reforms needed to lift productivity and rural incomes.

3. China: Growth Model Transition and Market Signals

China’s markets have rallied despite macro headwinds: prolonged deflationary pressure, property‑sector adjustment, and uneven consumption. A useful lens is a growth‑model transition away from property‑ and infrastructure‑led expansion toward digital and green drivers. Domestic renewable investment and advanced manufacturing are ascending, yet cannot fully offset the housing drag in the short term. Policy is pivoting toward more front‑loaded, consumption‑oriented measures, while fiscal constraints at the local level complicate execution. External tariffs lengthen supply chains but also incentivise rebalancing toward domestic demand.

4. Trade, Global Value Chains, and Investment

Trade patterns are shifting. China’s exports are rotating toward emerging markets, while foreign investment has tilted towards ASEAN as both destination and trans‑shipment hub. India remains central to ‘China‑plus‑one’ strategies, but global firms are diversifying rather than reconcentrating production. Integration is currently assembly‑led (for example, smartphones), with a multi‑decade climb up the value chain ahead. Pragmatic cooperation between the two economies is most feasible in non‑sensitive manufacturing through joint‑venture models that substitute imports, localise supply chains, generate jobs, and export from India. Infrastructure remains more sensitive. Managing dumping risks and persistent bilateral imbalances will be essential to sustain any thaw in economic ties.

5. Investor Perspective: Promise and Execution Risk

Investors view India as a major growth story, contingent on job‑rich growth and continued reforms. In China, competitiveness remains strong across many sectors, reinforced by real exchange‑rate dynamics. Despite de‑globalisation narratives, incentives for cross‑border finance persist: allocations to both markets have risen and valuations remain elevated in India. Services exports are a key Indian strength but carry two‑sided exposure to AI—adoption advisory upside versus potential domestic job displacement.

6. Digital Finance and Cross‑Border Payments

Digital rails are reshaping payments. Interoperable, 24/7 systems have driven mass adoption, expanded merchant acceptance, and lowered average ticket sizes, embedding digital payments into daily life. Cross‑border links between fast‑payment systems offer transparent FX and convenient retail remittances, complementing card and correspondent‑banking channels. In parallel, debate continues over central bank digital currencies, stablecoins, and tokenised deposits. A pragmatic path is hybrid: public infrastructure for safety and inclusion, private innovation for programmability and niche cross‑border use, and bank tokenisation to integrate with prudential frameworks. Policy must guard against dollarisation via private tokens in capital‑managed economies.

7. ASEAN Context: Resilience, Risks, and Supply‑Chain Opportunity

Southeast Asia enters this period with stronger resilience than in the late 1990s—improved inflation control, sounder fiscal management, better‑capitalised banks, and growing modern‑services exports. Nonetheless, political and structural challenges in key economies could weigh on regional momentum. Supply‑chain reconfiguration is a structural positive: tariff differentials and geopolitics are tilting greenfield FDI toward ASEAN, though managing surges and local backlash will require policy finesse. Region‑wide economic coordination will likely advance via coalitions of the willing rather than full consensus.

8. Policy Priorities and Practical Options

• In India, cushion tariff‑exposed MSMEs while accelerating deregulation; sequence factor‑market and agricultural reforms to raise productivity and rural incomes.
• In China, deepen power‑sector reform and social protection to support consumption; advance intergovernmental fiscal changes that strengthen local finances without over‑reliance on land revenues. • For both, channel any bilateral thaw into non‑sensitive manufacturing joint ventures with clear technology transfer, local linkages, and export orientation; maintain robust trade‑remedy frameworks to ensure fair competition.
• Expand cross‑border fast‑payment links with transparent FX, common compliance standards, and consumer safeguards; clarify rules for stablecoins and tokenised deposits to protect singleness and integrity of money.

Conclusion

The two largest Asian economies face different constraints but share a common imperative: adapt to a fractured global economy without losing the benefits of openness. The most credible route is pragmatic and hybrid—reform at home, targeted cooperation abroad, interoperable payment infrastructure, and safeguards that preserve monetary sovereignty and market integrity. If policies focus on job creation, social protection, and credible rules for cross‑border commerce, both economies can convert today’s shocks into tomorrow’s competitive advantages—while anchoring a more resilient regional order.

Panel 2: Central Bank Digital Currencies, Payment Systems and Global Governance

Digital money is moving from experiment to infrastructure. Advances in payments technology, combined with geopolitical risk management, are reshaping the ‘financial plumbing’ of cross‑border transactions. At the same time, central bank digital currencies (CBDCs), private stablecoins, tokenised deposits, and fast‑payment rails are evolving along parallel paths. The following synthesises the workshop discussion into key themes, focusing on where competition is inevitable, where collaboration is feasible, and what governance choices will determine efficiency, resilience, and trust in the next phase of global payments.

1. Why Digital Payments Matter Now

Payments are the connective tissue of the economy. Faster, cheaper, programmable transfers reduce friction for households, firms, and the state. Three forces explain the present inflection point: (i) technology that enables 24/7 instant settlement and rich data exchange; (ii) geopolitics that encourages de‑risking and partial ring‑fencing of financial channels; and (iii) the regulatory impetus created by recent legislative moves in major jurisdictions, which push others to clarify their stance. Together, these forces raise the stakes for design choices that balance openness with security, innovation with stability, and inclusion with integrity.

2. India’s Digital Rails and Cross‑Border Reach

India’s payments architecture demonstrates how public digital rails and private innovation can scale. Interoperability by design, customer centricity, and a strong trust framework have driven adoption. Unified Payments Interface (UPI) has evolved from person‑to‑person transfers to widespread merchant acceptance, with soaring volumes and falling average ticket sizes that signal everyday use. Credit lines and cards now link to UPI, and IPO subscriptions can be executed while retaining interest on funds until allotment. Cross‑border functionality is extending reach through linkages with peer real‑time systems, enabling transparent FX quotes and settlement in either currency. Offline, feature‑phone options widen access; e-mandates enable recurring payments; and robust uptime alongside data safeguards underpin confidence. The model illustrates how well‑governed public rails can catalyse private‑sector scale while preserving the singleness of money.

3. Stablecoins, CBDCs, and Tokenised Deposits: Roles and Trade‑offs

Three instruments are often conflated but serve different purposes:

• Stablecoins: privately issued tokens, typically backed by short‑dated sovereign assets or bank deposits. They promise programmability and global reach but must prove singleness, integrity, and elasticity to function as money. Run, de‑peg, and liquidity risks remain, and widespread dollar backing concentrates currency risk.
• CBDCs: sovereign digital money, a direct liability of the central bank. They can support cross‑border experiments, public‑policy use cases (e.g., purpose‑bound transfers, time‑ or merchant‑restricted spending), and settlement finality. Domestic benefits depend on whether they add capabilities not already provided by fast‑payment systems.
• Tokenised deposits: bank liabilities represented on distributed ledgers. Unlike stablecoins, these sit on regulated balance sheets and can support credit creation, offering a bridge between novel settlement technology and existing prudential frameworks. The emerging architecture is likely to be hybrid: public rails for ubiquity and safety; private tokens for programmability and niche cross‑border use; and tokenised bank money for scalable institutional settlement.

4. Interoperability and the Cost of Fragmentation

Domestic systems are converging on instant payments, but cross‑border remains fragmented. Several multi‑CBDC and fast‑payment linkage initiatives coexist, built on different technologies and rulebooks. Without common standards for identity, messaging, compliance, FX, and settlement finality, networks risk balkanisation. Practical progress rests on four pillars: (i) shared technical standards and APIs; (ii) mutual recognition of KYC/AML outcomes and travel‑rule compliance; (iii) transparent, competitive FX with pre‑trade quotes; and (iv) clear liability, recourse, and data‑protection regimes. Interoperability needs both policy alignment and market incentives.

5. Global Governance and Currency Structure

Stablecoin growth has, to date, reinforced the role of the U.S. dollar, as most tokens are backed by dollar assets. If this persists, stablecoins could deepen demand for short‑term Treasuries while importing U.S. policy and market cycles into crypto‑native instruments. Broadening the currency mix requires deep, liquid asset markets to back tokens, robust custody, and credible legal regimes. Offshore issuance in open financial centres can provide testing grounds, but sustainable adoption depends on real‑economy use cases, not just financial engineering. Policymakers must weigh efficiency gains against risks of dollarisation in economies with capital‑flow management and the implications for monetary sovereignty.

6. Risk Management and Public‑Interest Safeguards

A resilient architecture embeds safeguards by design: consumer protection, data minimisation, selective privacy (including tiered anonymity for small transactions), cyber resilience, operational redundancy, and proportionate supervision of non‑bank issuers. Prudential standards for reserves, segregation of client assets, auditability, and resolution regimes are essential for stablecoin issuers. For CBDCs and tokenised deposits, attention to offline functionality, inclusiveness, and competition policy can prevent unintended crowding‑out of bank intermediation.

7. Use Cases and Adoption Pathways

Early traction is strongest where pain points are largest: remittances, B2B trade settlement, treasury cash management, and high‑fee card‑dominated corridors. Purpose‑bound public transfers, programmable subsidies, and green‑finance vouchers demonstrate policy utility. Over time, institutional settlement with tokenised deposits and atomic delivery‑versus‑payment could compress risk and cost in capital markets. Retail displacement of mature domestic rails is less likely in the near term; hybrid coexistence is the practical path.

8. Policy Options and Near‑Term Priorities

• Clarify taxonomy and supervisory perimeters for CBDCs, stablecoins, and tokenised deposits.
• Set reserve, disclosure, and redemption standards for stablecoins, including concentration and interest‑rate risk controls.
• Expand cross‑border links between fast‑payment systems with transparent FX and aligned compliance.
• Advance multi‑CBDC pilots focusing on common standards rather than competing stacks; prioritise interoperability with existing rails.
• Promote public‑interest use cases (financial inclusion, cheaper remittances, purpose‑bound transfers) with outcome metrics.
• Deepen local‑currency asset markets and legal certainty to support non‑USD digital money where appropriate.
• Build capacity in data governance, privacy‑preserving compliance, and cyber security across the ecosystem.

Conclusion

Digital money will not converge on a single model. The most credible path is a plural, interoperable system in which public infrastructure guarantees safety and access, private innovation delivers programmability and user experience, and robust governance maintains trust across borders. Strategic choices made now—on standards, supervision, and cross‑border linkages—will determine whether the next decade brings lower costs and broader inclusion, or a fragmented landscape of walled gardens. A pragmatic focus on interoperability and safeguards can tilt outcomes toward resilience and shared gains for India, China, ASEAN, and the wider global economy.