Global Risk Indexes (13-02-2025)

Global 97 (0 —)
MENA 98 ( —)
APAC 95 (-1 ▼)
Europe 97 ( —)
Africa 97 ( —)
AMERs 98 ( —)
Markets 98 ( —)
Mei Ling, Asia Pacific region analyst at Worldwise Analytica

Mei Ling

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

Asia-Pacific Faces Deepening Economic Shifts and Military Tensions Amid U.S.-China Trade War, South China Sea Standoff, and Regional Realignments

Economic and geopolitical transformations are reshaping the Asia-Pacific region as China, India, and the U.S. reposition themselves in global trade, energy, and security affairs. The shifting dynamics in energy imports, defense modernization, and economic policy are reinforcing a more competitive and fragmented regional order.

Trade and Energy Shifts: China's Tariffs and Russia's Oil Exports Reshape Asia's Markets

China's imposition of a 10% tariff on U.S. crude oil imports is set to disrupt global energy flows, marking a significant shift in Beijing's trade policy amid heightened tensions with Washington. While China's crude imports are expected to remain steady in the short term, this tariff will likely lead to long-term adjustments, benefiting exporters from Angola, Brazil, and Russia. India, on the other hand, is capitalizing on the situation, boosting its Russian oil imports in response to Western sanctions that have restricted Moscow's access to traditional markets.

The increasing economic interdependence between Russia and India could further align New Delhi's foreign policy with Moscow, complicating U.S. efforts to counterbalance China's influence in the Indo-Pacific. Meanwhile, Beijing's recalibration of its energy strategy highlights its broader economic restructuring as it navigates trade tensions with the U.S.

South China Sea Tensions: The Philippines Strengthens Military Posture

With the Philippines accelerating its military modernization through the acquisition of BrahMos missiles from India and plans to purchase submarines, Manila is signaling its determination to counter China's maritime expansion. At the same time, China's assertiveness in the South China Sea is evident in its increasing naval activity, which has drawn concern from regional and global stakeholders.

Australia's condemnation of unsafe maneuvers by Chinese fighter jets against an RAAF surveillance aircraft in the South China Sea further underscores the growing volatility of the region. The South China Sea remains a flashpoint where increasing military maneuvers by China, the U.S., and regional allies risk further escalations.

China's Strategic Engagement in the Pacific

The Cook Islands' growing engagement with China, through discussions on economic and infrastructure partnerships, has raised concerns in New Zealand, which views Beijing's expanding influence in the Pacific with caution. The Pacific Islands have become a key theater for strategic competition, with China using economic incentives and infrastructure projects to expand its foothold.

New Zealand's concern over Cook Islands' engagement with Beijing reflects a broader anxiety among Western allies about China's influence in the Pacific, where Washington, Canberra, and Wellington have sought to counter Beijing's strategic outreach.

North Korea's Escalation: Dismantling of Inter-Korean Infrastructure

North Korea's decision to dismantle a South Korean-built facility at Mount Kumgang further erodes hopes for diplomatic engagement between Pyongyang and Seoul. The move reflects Pyongyang's broader strategy of disengaging from inter-Korean cooperation while reinforcing its hostile stance towards the South.

The demolition of this symbolic site, coupled with North Korea's increased military activities, suggests that Pyongyang is intensifying its isolationist policies while doubling down on its alignment with Moscow and Beijing.

Looking Ahead: A Region in Flux

The Asia-Pacific region remains a complex and evolving geopolitical theater where trade wars, military buildups, and shifting alliances are shaping the future. The deepening divide between China and the U.S., the growing military assertiveness in the South China Sea, and the strategic realignments in the Pacific are all contributing to an environment of uncertainty. In the coming months, the impact of these developments on regional stability will become more pronounced.

Geopolitical Risk Assessment for the Asia Pacific
(13-02-2025)

The Asia-Pacific region continues to face an evolving geopolitical landscape marked by economic realignments, escalating military tensions, and shifting alliances. U.S.-China trade frictions are intensifying, with Beijing's new tariffs on American crude imports reshaping energy flows in Asia. Meanwhile, China's assertive foreign policy, particularly its growing presence in the South China Sea and strategic engagement with the Cook Islands, signals deeper contestation over regional influence. The Philippines' military expansion, Australia's concerns over Chinese military activity, and North Korea's dismantling of inter-Korean infrastructure further underscore the heightened strategic volatility in the region.

Geopolitical Risk Index

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

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