Global Risk Indexes (02-02-2025)

Global 98 (0 —)
MENA 96 ( —)
APAC 97 ( —)
Europe 99 ( —)
Africa 98 (+1 ▲)
AMERs 98 (+1 ▲)
Markets 99 ( —)
Mei Ling, Asia Pacific region analyst at Worldwise Analytica

Mei Ling

Empowering minds, shaping decisions: Insights from the heart of geopolitics

Asia-Pacific at a Strategic Crossroads: Trade Fragmentation, AI Rivalries, and Military Confrontations Define Regional Instability

The past week has underscored the growing fragility of the Asia-Pacific region, with economic fragmentation, security tensions, and governance crises accelerating the strategic realignment of global powers. From AI disruptions and trade battles to South China Sea flashpoints and political instability, the region faces a complex web of risks that require urgent attention.

AI as the New Geopolitical Battlefield: China's DeepSeek Faces Global Resistance

The scrutiny surrounding China's DeepSeek AI has intensified, with South Korea joining European regulators in investigating data privacy concerns. The backlash highlights a broader Western pushback against China's expanding technological influence, mirroring previous restrictions on Huawei. As China continues to challenge the U.S. in AI development, the battle over regulatory frameworks and market access is becoming a critical front in global strategic competition. This trend points toward a future of technological decoupling, where nations will increasingly align AI policies along geopolitical lines.

South China Sea: The Region's Most Volatile Flashpoint

Chinese aggression in the South China Sea has escalated further, with increased harassment of Philippine vessels, water cannon attacks, and territorial encroachments. Manila's frustration has led to deeper U.S.-Philippines military cooperation, including joint exercises involving the Typhon missile system. However, Beijing's defiance of international arbitration rulings signals a long-term commitment to its maritime claims. The risk of a direct military clash is growing, particularly as the U.S. and its regional allies strengthen their deterrence strategies.

Trade and Economic Fragmentation: Trump's Tariff Strategy and BRICS De-dollarization

Trump's threats to impose new tariffs on Asian semiconductor and pharmaceutical exports, coupled with his warning against BRICS' alternative currency initiatives, have added further strain to an already fractured global economic landscape. While BRICS members remain divided on a unified currency, Trump's push to maintain U.S. dollar dominance could accelerate de-dollarization efforts. Meanwhile, Japan's economic resilience amid shifting global monetary policies reflects its growing role as a financial safe haven, while China's economic slowdown continues to disrupt global supply chains.

Political Instability in Myanmar and Pakistan Fuels Regional Uncertainty

Myanmar's military government has extended emergency rule, disregarding regional diplomatic pressure. The junta's insistence on holding elections despite ongoing armed resistance underscores the country's deepening crisis. Meanwhile, Pakistan's Balochistan region has witnessed a surge in separatist violence, threatening China's Belt and Road investments in the region. These internal conflicts pose risks not only to national stability but also to broader regional security.

Australia's Domestic Challenges: Rising Extremism and Economic Pressures

The rise of domestic extremism in Australia, evidenced by a foiled antisemitic terror plot in Sydney, has put Prime Minister Anthony Albanese under pressure to bolster national security measures. Simultaneously, Australia's worsening housing crisis has further eroded public confidence in the government. With national elections on the horizon, these domestic issues are likely to shape Canberra's policy priorities in the coming months.

Taiwan's Diplomatic Struggles Continue

President Lai Ching-te's diplomatic outreach to the Vatican reflects Taiwan's ongoing battle against Beijing's diplomatic isolation campaign. Despite its shrinking number of formal allies, Taiwan continues to leverage growing international support for cross-strait stability. Its strategic value as a technological powerhouse, particularly in semiconductors, remains its strongest counterweight to China's coercive tactics.

The Asia-Pacific's strategic landscape is shifting rapidly, with economic realignments, military buildups, and governance shifts defining the region's trajectory. The coming months will be critical in determining whether regional players can navigate these intersecting crises through strategic diplomacy and multilateral engagement.

Geopolitical Risk Assessment for the Asia Pacific
(02-02-2025)

The Asia-Pacific is at a critical inflection point, with rising trade and technology tensions, intensifying maritime conflicts, and shifting political landscapes reshaping the region's trajectory. The increasing intersection of economic fragmentation, military buildups, and governance crises demands proactive diplomatic strategies to prevent instability.

Geopolitical Risk Index

Developments to Follow for the Asia Pacific (See All Global)

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