China and South Korea are driving the surge, but regional growth is slowing.
This article appears in the September 2026 issue of Global Finance Magazine.
Global goods trade surged to US$13.7 trillion in the first half of this year, up 12.5% year over year, with Asia-Pacific leading the charge. The figures reflect an ongoing reconfiguration of global trade balances, as China’s goods trade surplus expanded further in the first quarter and the U.S. goods trade deficit continued to narrow.
But the trade figures only tell half the story, as growth is slowing across the Asia-Pacific region.
According to UNCTAD’s Global Trade Update, East Asia recorded the strongest trade growth in the first quarter. Both developed and developing economies in the region expanded at rates well above the global average, but developing economies drove most of the growth. While trade by developing economies globally, as well as South-South trade, recorded double-digit gains over the 12 months to the first quarter of 2026 when East Asia is included, they registered an overall contraction when East Asia is excluded, driven largely by reduced imports and exports from the Middle East and South Asia.
South Korea recorded the region’s strongest export growth, up 20% quarter over quarter, followed by China at 11% and Japan at 4%. South Korea also posted the strongest growth in services exports, at 9%. China led in imports at 13%, with South Korea next at 6% and Japan at 3%.
Asia-Pacific’s strength in automotive manufacturing and AI innovation is fueling trade growth in both industries. According to Allianz Trade, global exports of AI-enabling goods surged 280% between 2014 and 2025 to $3.8 trillion.
“Asia dominates the supply side, accounting for 65% of global AI-related exports and seven of the top 10 exporters, led by China (18% of AI-related exports), Taiwan (12%), and Hong Kong (11%),” the report states.
New Alliances
Major geoeconomic shifts continue to reshape trade patterns.
Canada’s trade dependence on China is rising—up 0.9% from the fourth quarter of 2025 to the first quarter of this year—while the trade relationship between the U.S. and China is weakening. But East Asian economies, including Thailand and Vietnam, are becoming more dependent on both China and the U.S.
Much of the reported trade growth reflects higher prices rather than higher volumes, UNCTAD noted, as escalating costs in energy, transport, logistics, and manufacturing fuel trade inflation. And trade strength does not equal broad-based economic strength; UNCTAD’s own forecasts point to a slowdown ahead in GDP.
The organization’s Trade and Development Foresights 2026 report projects that economic growth in East Asia will slow to 3.7% for the remainder of the year, largely due to the region’s heavy reliance on energy imports from the Middle East. China’s growth is expected to ease to 4.6%, within its newly adjusted target range of 4.5% to 5%. Economic activity in Southeast Asia is expected to hold broadly steady at 4.3%. While South Asia remains the fastest-growing subregion, GDP growth there is forecast to slow from 6.3% in 2025 to 5.5%, with rising fossil fuel prices threatening to stoke inflation and financing pressures.
Deborah Ritchie is a contributing writer based in the U.K.
The United Kingdom is moving toward adding a flying-boom aerial refueling capability to the Royal Air Force (RAF), a requirement being driven in large part by the future Tempest combat jet, being developed under the Global Combat Air Program (GCAP) initiative.
In a written response to opposition MP Ben Obese-Jecty, U.K. Defense Minister Luke Pollard confirmed that the RAF’s existing probe-and-drogue aerial refueling capability will eventually be complemented by a boom system. The move would give Britain a sovereign capability to refuel aircraft equipped with the U.S.-standard boom receptacle, including the Tempest, while also improving interoperability with other NATO and allied air forces.
A Royal Air Force Typhoon FGR4 accompanies a Voyager tanker during a Quick Reaction Alert training scenario in March 2026. Crown Copyright Crown Copyright
“The Royal Air Force currently operates a probe and drogue air-to-air refueling system and will complement this with the development of a boom system,” Pollard said. “This will ensure we have a sovereign air-to-air refueling capability for the future Royal Air Force fleet that enhances interoperability with NATO allies and partners.”
For the first time we have a Minister confirming the Boom is coming to Royal Air Force tankers, although the when and the how currently remain very much up in the air.
Still significant to have it through government voices and not just through the RAF itself. pic.twitter.com/esRN7NVoPy
The decision follows comments by a senior RAF official in July indicating that the service was already examining how to meet the requirement.
“We currently do not have boom [-equipped tankers] in the UK. We have a requirement for a boom from GCAP, so we have to resolve that requirement and that is what we are now looking at,” the official said at the Air Power Association Global Air and Space Chiefs’ Conference in London, according to Janes. “I [am] certain that at some point we are going to have to work out how we deliver a sovereign boom capability for our own combat aircraft.”
The requirement is particularly significant because GCAP’s Tempest is being designed with a fuselage-mounted receptacle for boom refueling. Unlike the probe-and-drogue arrangement used by the RAF’s existing Voyager tankers, a flying boom uses a rigid, telescoping refueling tube that is maneuvered by an operator aboard the tanker into the receiver aircraft’s receptacle.
A Royal Air Force Voyager tanker performs aerial refueling of a Spanish Navy EAV-8B Harrier II during combined long-range strike training. U.S. Navy courtesy photo
One of the major advantages of the boom system is its higher fuel-transfer rate. That makes it especially useful for large aircraft and combat aircraft that need to take on substantial quantities of fuel quickly, reducing the time spent on the tanker.
Tempest is not, however, the only RAF aircraft that depends on the boom standard. The RAF already operates several boom-equipped receiver aircraft, including P-8A Poseidon maritime patrol aircraft, RC-135W Rivet Joint intelligence, surveillance, and reconnaissance aircraft, and C-17A Globemaster III airlifters. The E-7A Wedgetail airborne early warning aircraft also uses a boom receptacle, while the forthcoming RAF F-35A fleet will add another major boom receiver to the service.
The first Wedgetail aircraft, destined to serve with the RAF, at RAF Lossiemouth, Scotland, in May 2026. Crown Copyright
Currently, the RAF has no boom-equipped tanker to support them.
Its principal tanker fleet consists of Airbus A330 Multi-Role Tanker Transport (MRTT) Voyager aircraft operated by the AirTanker consortium and leased to the RAF under a private finance initiative. Unlike many A330 MRTT operators around the world, which acquired the aircraft with a flying boom, the British Voyagers were configured exclusively around hose-and-drogue refueling.
The Voyager K2 is equipped with two wing-mounted Cobham 905E hose-and-drogue refueling units. The K3 adds a third refueling point in the form of a Cobham 805E fuselage refueling unit, or FRU, located at the rear of the aircraft. The latter provides a higher fuel-transfer rate than the wing-mounted units.
The view from the cockpit of an A400M during air-to-air refueling with a Voyager KC3, via the fuselage refueling unit. Crown Copyright
Since the fuel is stored in existing tanks, the Voyager’s cabin is still available to accommodate up to 291 passengers and the cargo hold for freight. One Voyager, serial ZZ336, nicknamed Vespina, is modified for long-range VIP transport but still functions as a fully capable tanker.
A video showing Voyager ZZ336 refueling RAF and German Eurofighter Typhoons during the enhanced Air Policing mission in Romania:
RAF Voyager refuels German Eurofighters and RAF Typhoons
Up to 14 Voyagers are available to the RAF under the current arrangement.
The future of those aircraft is now one of the key questions surrounding Britain’s planned boom capability.
One possibility would be to modify some of the existing Voyagers, installing a boom system in the rear fuselage. The baseline Airbus’ A330 MRTT design already incorporates a provision for a flying boom. At the time the United Kingdom ordered its Voyagers, boom refueling was not considered essential, so the capability was deleted to save weight, complexity, and cost — a decision which was to prove very shortsighted.
Such a conversion, however, would involve engineering, certification, ownership, and contractual considerations, particularly given that the RAF does not directly own the Voyager fleet.
Britain could also decide that modifying the existing aircraft is not worthwhile. The current Voyager private-finance arrangement runs until 2035, by which point the airframes will be considerably older. Rather than investing heavily in aircraft approaching the end of their contracted service period, the government could opt to acquire new A330 MRTTs or another tanker type equipped with a boom from the outset.
With refueling boom extended, a Republic of Singapore Air Force A330 MRTT leads a formation flight alongside a U.S. Air Force F-16C assigned to the 36th Fighter Squadron, Osan Air Base, Republic of Korea, two RSAF F-15SGs, and a Royal Thai Air Force F-16 during Exercise Cope Tiger 23. U.S. Air Force courtesy photo
It remains unclear, however, whether a podded boom would offer the performance and integration characteristics required for Tempest and the RAF’s wider fleet. There is also a question about what platform it could be installed on.
A rendering of the Tempest future combat jet. BAE Systems BAE Systems
At the same time, TWZhas previously highlighted how drones equipped with buddy stores could operate in a hub-and-spoke model, ferrying fuel from tankers positioned outside the threat envelope to aircraft operating at the tactical edge. This could be another option that might gain traction as the U.K. Ministry of Defense increasingly looks to unlock the potential of uncrewed capabilities, but must also be considered less likely, especially as a primary solution.
There is also a potential requirement for the tankers themselves to be capable of receiving fuel. Equipping a tanker with a receiver system would allow tanker-to-tanker refueling, extending the flexibility and reach of the RAF’s future air-to-air refueling force during long-range operations. Other A330 MRTT operators already benefit from this feature.
A Republic of Singapore Air Force Airbus A330 MRTT refuels a Royal Australian Air Force KC-30A MRTT during combined training at RAAF Base Darwin in Australia. Australian Department of Defense Republic of Singapore Air Force
While Tempest is providing the immediate catalyst, a refueling boom capability would also close an increasingly conspicuous gap in the RAF’s tanker force. The service is acquiring and operating an increasing number of aircraft built around the boom standard while relying on a tanker fleet configured around the alternative hose-and-drogue system.
Whether Britain modifies its existing Voyagers, replaces them, or adopts another solution entirely could become an important part of the RAF’s long-term force structure as the Tempest program advances.
Nvidia has recruited Wall Street to bankroll its own customers.
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The US chipmaker said last week it had signed memorandums of understanding with Wall Street’s largest asset managers, including Apollo Global Management, Blackstone, BlackRock, Brookfield Asset Management, Goldman Sachs and KKR to raise upwards of half a trillion dollars for AI companies to borrow against, money that will buy its chips and build the servers that run them.
The six firms will set up what Nvidia calls “compute financing platforms,” drawing on institutional money, insurance funds and private credit. Borrowers can use the proceeds for the chips as well as servers, networking equipment, buildings and power supply.
Nvidia has the option to guarantee up to a quarter of any given deal, which lowers the interest rate its customers pay while leaving most of the credit risk with the lenders.
CEO Jensen Huang said he approached only these six companies and none refused.
Keeping that spending off their own books is precisely the point, and the fact that such a structure is needed at all tells investors a great deal about where the constraints in the AI boom now lie.
The financial engineering rests on a single reclassification. Graphics processing units (GPUs) have always been treated as equipment that loses value quickly, superseded whenever a faster generation arrives.
Nvidia is effectively asking lenders to treat them instead as long-lived infrastructure, closer to a toll road or a power plant, that can be borrowed against for years.
“These are revenue-generating assets now,” Huang said, describing them as productive, long-lived and transferable between customers.
Why the money had to come from somewhere else
The timing reflects a squeeze that has been building all year.
Microsoft, Amazon, Alphabet, Meta and other hyperscalers whose cloud platforms host most of the world’s AI workloads have together guided roughly $720 billion (€624bn) to $745 billion (€646bn) of capital spending in 2026, an increase of about 77% on last year.
What analysts expect the hyperscalers to spend in 2027 alone has more than doubled in the space of a year, from a consensus of $480 billion (€416bn) in August 2025 to $1.08 trillion (€943bn) this month, a rise of about 127%, according to Bank of America.
The pattern has repeated at every stage.
Analysts who already considered last year’s investment unsustainable then watched the hyperscalers guide higher at the start of 2026, revise those figures upward again through the year, and pencil in larger sums still for next year and 2028.
Moody’s has warned that spending on this scale is eating into free cash flow and pushing tech groups into heavier borrowing. Alphabet recorded negative free cash flow of $5.9 billion (€5.1bn) in a quarter when it spent $44.9 billion (€38.9bn) on projects.
That is the pressure the structure of Nvidia’s Wall Street deal relieves.
Debt raised through these “compute financing platforms” sits with the financing vehicles rather than on a hyperscaler’s own accounts and also has Nvidia’s backing, which protects credit ratings and leaves room for conventional borrowing elsewhere.
For smaller operators the effect is larger still as companies such as CoreWeave and Nebius, which lack investment-grade ratings and pay dearly for credit, gain access to capital on terms previously reserved for the giants.
What the market actually read into it
The reaction was more ambivalent than the headline number suggests, and came weeks after a July selloff driven by doubts over whether AI spending will pay for itself.
Essentially, equity investors saw a bottleneck being cleared while credit investors saw something else: the cost of insuring Nvidia’s own debt against default rose after the news and has roughly doubled since late May.
Their doubt concentrates on the reclassification previously mentioned.
“Chips depreciate fast and lose value the moment a newer generation arrives,” warned Nigel Green of financial advisory firm deVere Group, noting that lending against them only works if the collateral holds its value.
Critics also point out that Nvidia is helping finance purchases of its own products, deepening the circularity that already worries the sector.
Goldman Sachs CEO David Solomon called it “a pivotal moment of a historic AI investment cycle.”
Whether it proves pivotal in the direction Solomon means depends on a question nobody can yet answer: what will the value of a current GPU be in five years?
