Global Risk Indexes (12-02-2025)

Global 97 (-1 ▼)
MENA 98 ( —)
APAC 96 (-2 ▼)
Europe 97 ( —)
Africa 97 ( —)
AMERs 98 ( —)
Markets 98 (-1 ▼)
Mei Ling, Asia Pacific region analyst at Worldwise Analytica

Mei Ling

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

Asia-Pacific on the Brink: Rising U.S.-China Trade War, Taiwan Tensions, and Economic Disruptions Shape Regional Landscape

The past week has been marked by escalating economic and military tensions in the Asia-Pacific region, driven largely by the ongoing U.S.-China trade war, geopolitical maneuvering in the Taiwan Strait, and broader structural vulnerabilities in regional economies. The specter of protectionism and economic nationalism looms large, as the United States continues to target key Asian economies with tariffs, prompting Beijing and other affected states to recalibrate their strategies.

Trade and Economic Pressures: U.S. Tariffs Redefining Asia's Economic Landscape

Washington's aggressive tariff policies are reshaping regional trade dynamics, forcing economies like Vietnam, Thailand, and South Korea to adapt to growing U.S. protectionism. The significant drop in Chinese grain imports has also disrupted global supply chains, affecting key agricultural exporters. Meanwhile, China's chip industry is facing a slowdown amid increasing U.S. sanctions, and its economic downturn continues to weigh heavily on regional markets. The reduction in Chinese demand for agricultural commodities and high-tech components is amplifying vulnerabilities in ASEAN economies.

At the same time, Beijing is leveraging its economic influence by expanding financial aid to countries affected by U.S. policy shifts. This is particularly evident in Southeast Asia, where China is filling the void left by Washington's retreat from development aid programs. The U.S. withdrawal from soft power engagements in the region, including its funding freeze for USAID, is allowing Beijing to solidify its position as the dominant external actor.

Geopolitical Flashpoints: Taiwan Strait and South China Sea

The presence of U.S. Navy warships in the Taiwan Strait has once again heightened tensions, with China responding through military exercises and diplomatic rebukes. Taiwan remains a key flashpoint, with Beijing intensifying its military pressure while Washington reaffirms its strategic commitment. Additionally, Chinese military maneuvers in the South China Sea, combined with growing defense partnerships between the U.S. and regional allies, suggest an escalating security dilemma.

Meanwhile, the Philippines remains a focal point in the regional power struggle. The ongoing political crisis involving Vice President Sara Duterte and the government's handling of internal security issues could affect Manila's ability to maintain a strong foreign policy stance. With Beijing seeking to expand its footprint in the South China Sea, any internal instability in the Philippines could further weaken its position against Chinese maritime assertiveness.

Strategic Realignments: Foxconn, Nissan, and Economic Nationalism

The corporate landscape is also witnessing significant geopolitical shifts. Foxconn's potential collaboration with Nissan underscores broader changes in the global supply chain, particularly as Japan's auto industry navigates competition from China's EV sector. Additionally, Thailand's move to legalize casino gaming as a means of economic recovery reflects the region's increasing reliance on foreign investment amid trade disruptions.

Further complicating economic realignments, Australia's efforts to diversify its critical minerals sector highlight the West's broader push to counter China's dominance in rare earth production. The Albanese government's newly passed tax incentives for critical minerals signal Canberra's growing resolve to integrate with U.S. and European supply chains, reducing dependence on Beijing.

Regional Security Concerns: Extremism and Domestic Challenges

Domestic security threats are also emerging across the region, with Singapore arresting a radicalized far-right extremist and Afghanistan experiencing another suicide bombing. These incidents point to the persistent risks posed by both domestic radicalization and Islamist insurgencies. Additionally, South Korea is navigating political uncertainty following the impeachment of President Yoon, raising questions about Seoul's ability to maintain stability amid economic and geopolitical pressures.

Looking Ahead: A Region on Edge

As the Asia-Pacific moves deeper into 2025, the convergence of economic, political, and military challenges underscores the region's fragile equilibrium. The trajectory of the U.S.-China trade war, coupled with Beijing's growing assertiveness in regional affairs, will be critical in shaping future developments. For regional players, the challenge will be balancing economic resilience, political stability, and security concerns in an increasingly unpredictable strategic landscape.

Geopolitical Risk Assessment for the Asia Pacific
(12-02-2025)

The Asia-Pacific region remains in a state of heightened geopolitical tension and economic uncertainty, with key developments contributing to a volatile strategic environment. U.S.-China trade tensions are intensifying, particularly with new U.S. tariffs and Beijing's countermeasures. Security concerns in the Taiwan Strait and South China Sea continue to escalate, as Washington and Beijing engage in strategic maneuvering. Meanwhile, economic fragility in China and ASEAN markets is becoming more pronounced, with external trade pressures compounding domestic slowdowns. Additionally, U.S. aid suspensions and shifting global alliances are creating new power vacuums, with Beijing expanding its influence across Southeast Asia and Africa. The risk level remains high due to these overlapping pressures and the potential for unforeseen escalations.

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

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