Global Risk Indexes (15-02-2025)

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

Mei Ling

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

Asia-Pacific Tensions Surge: U.S.-China Rivalry Expands, Military Confrontations Intensify, and Regional Realignments Accelerate

The Asia-Pacific region is undergoing a rapid escalation of geopolitical tensions, with the U.S.-China competition evolving beyond trade into military posturing, strategic influence campaigns, and technological battles. Meanwhile, regional players are recalibrating their defense and economic policies in response to growing instability.

U.S.-China Confrontation Deepens: Trade War, Military Posturing, and Pacific Expansion

The U.S.-China trade war is intensifying, with Beijing retaliating against Washington's technology and tariff restrictions. Chinese Foreign Minister Wang Yi warned that if the U.S. continues its economic pressure campaign, China will play along to the end, signaling a prolonged trade conflict that will have lasting implications on global markets. The tech war is also escalating, with China showcasing its AI capabilities despite U.S. chip restrictions, raising concerns over technological decoupling and the potential militarization of AI.

At the same time, China is aggressively expanding its influence in the Pacific, signing a strategic partnership with the Cook Islands, which has raised alarms in New Zealand. This move highlights China's long-term strategy of eroding Western influence in the South Pacific, a key region in Washington's Indo-Pacific strategy. New Zealand, Australia, and the U.S. may now seek countermeasures, including strengthening security partnerships with Pacific nations.

South China Sea: Australia-China Confrontation Raises Risk of Military Miscalculation

Tensions in the South China Sea have reached a critical point. The latest incident involving a Chinese fighter jet releasing flares near an Australian military aircraft is a direct signal from Beijing that it will not tolerate increased Western military activity in the region. Australia, a key U.S. ally, is facing mounting pressure to respond, increasing the risk of a direct military standoff in contested waters.

The Philippines is also caught in the middle of the growing military tensions. The deployment of U.S. Typhon intermediate-range missiles has triggered a strong response from China, which has labeled the system a strategic offensive weapon. This marks a significant shift in regional security, as the Philippines becomes an increasingly pivotal U.S. military outpost in the Indo-Pacific.

Taiwan's Military Modernization Setback

Taiwan's domestically developed AT-5 Brave Eagle jet trainer crashed due to engine failure, marking a setback in its military modernization efforts. While Taiwan remains reliant on U.S. military aid, the island's push for defense self-sufficiency is critical amid rising Chinese military pressure. China's increased military exercises near Taiwan signal that Beijing is testing Taiwan's response capabilities, raising fears of a future military showdown.

India's Military and Space Ambitions Gain Momentum

India is set to launch a major fighter jet procurement program, with multiple defense firms'including U.S., Russian, and European manufacturers'competing for a contract to supply 114 multi-role fighters. This underscores India's strategy of balancing relations with both Western allies and Russia to maintain its defense capabilities.

Meanwhile, India is also making strides in the space sector, with the privatization of its Small Satellite Launch Vehicle (SSLV) program. This move is part of a broader effort to expand India's presence in the commercial space market, positioning it as a key competitor to private players like SpaceX. With China rapidly expanding its own space capabilities, India's space ambitions will play a critical role in regional technological competition.

North Korea Issues Direct Warning to the U.S.

North Korea has issued a direct warning to the United States, stating that if Washington is concerned about its security, it must abandon military threats. This follows U.S. military drills in the Korean Peninsula and the deployment of a nuclear-capable submarine to the region. Pyongyang's rhetoric signals an increasingly defiant posture, which could lead to further missile tests or military provocations in the coming weeks.

Economic Pressures: Thailand Braces for U.S. Tariffs, Pakistan Seeks Foreign Investment

Thailand is making diplomatic efforts to avoid U.S. tariff measures, which could significantly impact its export-driven economy. With Washington increasingly scrutinizing trade imbalances, Thailand's strategy will likely involve new trade concessions or strategic adjustments.

Meanwhile, Pakistan is seeking a massive $2 billion annual investment from the World Bank's private sector arm to stabilize its economy. With high debt levels and economic uncertainty, Pakistan is pushing for infrastructure financing to maintain economic stability. However, political instability and security concerns remain key obstacles to long-term economic recovery.

Geopolitical Risk Assessment for the Asia Pacific
(15-02-2025)

The Asia-Pacific region is witnessing an intensification of geopolitical risks across multiple fronts. The U.S.-China rivalry is expanding beyond trade disputes into technology, military posturing, and Pacific influence campaigns. South China Sea tensions continue to escalate with direct confrontations involving China, Australia, and the Philippines. Taiwan's military modernization efforts have suffered a setback, while India is accelerating its defense acquisitions in response to China's growing military capabilities. North Korea is issuing direct warnings to the U.S., increasing security risks on the Korean Peninsula. Meanwhile, economic uncertainties persist, with Thailand bracing for potential U.S. tariffs and Pakistan seeking critical foreign investment to stabilize its fragile economy. With these dynamics in play, the risk of military miscalculation and economic fragmentation in the region remains exceptionally high.

Geopolitical Risk Index

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

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