Global Risk Indexes (17-02-2025)

Global 98 (0 —)
MENA 99 ( —)
APAC 98 (+1 ▲)
Europe 98 ( —)
Africa 98 ( —)
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 Tensions Reach New Heights: Taiwan Crisis Deepens, U.S.-China Economic War Expands, and Regional Powers Recalibrate

The Asia-Pacific region is facing a dangerous convergence of economic, military, and strategic flashpoints that could significantly alter global power balances. The U.S.-China rivalry is intensifying across multiple fronts, with new developments in Taiwan, trade policies, regional alliances, and military posturing that demand close scrutiny.

Taiwan Strait: Military and Diplomatic Tensions Surge

The Taiwan crisis continues to deepen, with the U.S. making a major diplomatic shift by removing language opposing Taiwan’s independence from its State Department website. This move, while subtle, signals a significant shift in Washington’s position and has drawn praise from Taipei, but will undoubtedly provoke an aggressive response from Beijing.

At the same time, the Canadian warship Ottawa transited through the Taiwan Strait, triggering condemnation from China’s military, which accused Canada of \deliberately stirring up trouble.\ This follows recent U.S. naval transits in the strait and comes amid increasing Chinese military operations around Taiwan, with 41 Chinese military aircraft and nine warships detected near the island.

China’s Economic and Strategic Maneuvers: Tech, Trade, and Private Sector Revival

Chinese President Xi Jinping hosted a high-profile symposium with business leaders, including Jack Ma, signaling a shift in Beijing’s approach to the private sector. With the economy struggling, Xi is attempting to revive investor confidence and leverage private enterprises in the U.S.-China tech war. The meeting reflects China’s growing realization that its state-led economic model must adapt to compete globally.

Meanwhile, China’s retaliatory tariffs on U.S. energy imports (15% on coal and LNG, 10% on crude oil) are expected to significantly impact global energy trade. China is likely to divert its energy imports to Russia, Australia, and Canada, while the U.S. may need to seek alternative buyers like India, Japan, and South Korea. The result is an increasingly fragmented global energy landscape.

Indonesia's Economic Strategy: Forex Controls and Trade Realignments

Indonesia has introduced strict foreign exchange regulations, requiring exporters to hold all proceeds domestically for at least one year. President Prabowo Subianto claims this move will inject $80 billion into Indonesia’s forex reserves and stabilize the currency, but it is also likely to raise concerns among international investors. While this policy strengthens Indonesia’s economic sovereignty, it risks deterring foreign trade partners and reducing liquidity in the capital markets.

South Korea’s AI and Semiconductor Push

In response to the escalating U.S.-China tech rivalry, South Korea has announced plans to secure 10,000 high-performance GPUs to strengthen its AI capabilities. With Washington imposing strict export controls on AI chips to China, Seoul is positioning itself as a key technological player and aligning more closely with the U.S. in the global AI race. This decision is likely to further intensify U.S.-China competition in the semiconductor sector.

Australia’s Political and Economic Shake-Up

Australia has announced a two-year ban on foreign investors buying existing homes, a politically charged move aimed at tackling the housing crisis ahead of national elections. With inflation rising and housing affordability emerging as a key voter issue, the government is under pressure to address public discontent. Meanwhile, Australian steelmakers are benefitting from rising U.S. tariffs on imported steel, reinforcing the ongoing shift in global trade flows.

Looking Ahead: A Region on the Brink of Further Escalation

With multiple crises unfolding simultaneously, the coming weeks will be critical in shaping the region’s geopolitical landscape. **Taiwan remains the most immediate flashpoint**, while U.S.-China economic tensions continue to fragment global markets. Meanwhile, **regional players like South Korea, Indonesia, and Australia are recalibrating their strategies** to navigate an increasingly unstable world. The risk of a **major geopolitical miscalculation has never been higher**.

Geopolitical Risk Assessment for the Asia Pacific
(17-02-2025)

The Asia-Pacific region is experiencing an unprecedented escalation of geopolitical tensions, with economic, military, and strategic confrontations intensifying simultaneously. The U.S.-China rivalry is expanding across trade, technology, and military domains, with increased security risks in the Taiwan Strait and broader economic fragmentation across global markets. China’s crackdown on U.S. energy imports, Taiwan's rising diplomatic support, and the intensification of military maneuvers in disputed waters all point to a region heading toward deeper conflict. Meanwhile, Indonesia’s economic policies, South Korea’s AI and semiconductor push, and Australia’s political and financial shifts further indicate a complex and volatile environment. The potential for military miscalculation and economic disruption has never been higher, requiring close monitoring of unfolding developments.

Geopolitical Risk Index

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

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