Global Risk Indexes (18-02-2025)

Global 98 (0 —)
MENA 99 ( —)
APAC 98 ( —)
Europe 98 ( —)
Africa 98 ( —)
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

Taiwan Crisis Escalates, U.S.-China Trade War Expands, and Asia-Pacific Economies Brace for Financial Uncertainty

The Asia-Pacific region is at a critical inflection point, with heightened military, economic, and diplomatic maneuvers across multiple fronts. The Taiwan crisis is deepening, the U.S.-China trade war is escalating, and regional economies are making significant policy shifts to navigate an increasingly volatile global order.

Taiwan Strait: Military Buildup and Intensifying U.S.-China Confrontation

Taiwan has formally approved the purchase of U.S.-made M1A2 Abrams tanks in a move that will bolster its land-based deterrence capabilities. This procurement, alongside ongoing U.S. arms deliveries, including Stinger missiles and advanced radar systems, signals Washington’s deepening military commitment to Taiwan. Beijing is expected to react aggressively, further increasing the risk of military incidents in the Taiwan Strait.

Meanwhile, China has increased its military air and naval activity near Taiwan, with 45 aircraft and 11 warships detected within Taiwan’s air defense zone. The People's Liberation Army (PLA) is continuing “combat readiness patrols”, which appear designed to test Taiwan’s defenses and reinforce Beijing’s territorial claims. This aggressive stance raises concerns about an imminent blockade scenario or escalatory military action.

U.S.-China Economic Confrontation Expands: Energy Tariffs and Investment Restrictions

China has expanded its tariffs on U.S. energy imports, imposing a 15% duty on American liquefied natural gas (LNG), further disrupting global energy markets. This move follows Beijing’s earlier 10% crude oil tariff and indicates a strategic effort to limit reliance on U.S. energy while reinforcing partnerships with Russia and Middle Eastern suppliers.

Meanwhile, the Biden administration has proposed new investment restrictions targeting Chinese AI and semiconductor firms, signaling an acceleration of Washington’s economic containment strategy. These measures will likely prompt Chinese counter-sanctions, deepening technological and capital market fragmentation.

China’s Growing Influence in the Pacific: Economic and Strategic Expansion

China is strengthening its economic ties with the Pacific Islands, with a high-profile diplomatic visit to Fiji and new infrastructure investment pledges. Beijing’s increased presence in Pacific nations traditionally aligned with Western allies signals a strategic push to undermine U.S. and Australian influence.

At the same time, Hong Kong’s financial sector is shifting capital flows toward ASEAN nations, reflecting China’s broader economic realignment. This trend is expected to bolster Beijing’s trade partnerships with Southeast Asia, positioning ASEAN as a key alternative market amid U.S. and European restrictions.

South Korea’s $30 Billion Trade Financing Initiative

South Korea has announced a massive $30 billion trade financing program aimed at stabilizing export-driven industries impacted by the global trade war. This initiative will support key sectors such as semiconductors, shipbuilding, and electric vehicle batteries, reinforcing Seoul’s position in global supply chains while countering the risks posed by U.S.-China decoupling.

Indonesia’s Resource Nationalism and Economic Overhaul

Indonesia is tightening foreign investment rules in its mining sector, requiring higher domestic processing of key minerals such as nickel and bauxite. These policies align with Jakarta’s long-term ambition to become a global leader in battery production, but they also risk deterring foreign direct investment (FDI).

North Korea’s Escalatory Rhetoric and Missile Development

North Korea has warned of “new strategic military measures” if the U.S. continues joint military drills with South Korea. Pyongyang’s latest missile test—featuring a solid-fuel intercontinental ballistic missile (ICBM)—demonstrates an advancement in its nuclear strike capabilities. This escalation suggests that the Korean Peninsula is moving toward a more confrontational phase.

Looking Ahead: A Region on the Brink

The Asia-Pacific is entering a period of sustained geopolitical instability, with the Taiwan Strait crisis, the U.S.-China trade war, and regional economic shifts creating a volatile and unpredictable landscape. The potential for military miscalculation, economic fragmentation, and political realignments remains at a critical level.

Geopolitical Risk Assessment for the Asia Pacific
(18-02-2025)

The Asia-Pacific region is witnessing an intensification of economic, military, and strategic confrontations. The Taiwan Strait is emerging as the most immediate flashpoint, with heightened U.S. arms sales, Taiwan’s growing defense procurement, and aggressive Chinese military maneuvers. The U.S.-China trade war is expanding, with new tariffs, investment restrictions, and retaliatory energy policies reshaping global markets. Meanwhile, China is deepening its economic and diplomatic engagements in the Pacific, while Australia, South Korea, and Indonesia pursue bold economic strategies to mitigate financial instability and trade risks. North Korea’s escalatory rhetoric and nuclear posturing further raise security concerns, adding to an already fragile regional landscape. The risks of military miscalculation, economic fragmentation, and diplomatic confrontations remain critically high.

Geopolitical Risk Index

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

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