Global Risk Indexes (19-02-2025)

Global 98 (0 —)
MENA 98 (-1 ▼)
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

Asia-Pacific Faces Heightened Geopolitical Risks as Taiwan Tensions Surge, U.S.-China Economic War Deepens, and Regional Conflicts Intensify

The Asia-Pacific is entering a phase of extreme geopolitical turbulence, with escalating military confrontations, economic power struggles, and shifting alliances. The Taiwan crisis is worsening, the U.S.-China trade war is accelerating, and regional economies are pursuing aggressive policy adjustments to navigate rising uncertainty.

Taiwan Strait: Military Confrontation and Strategic Maneuvering

China has conducted its largest military drills near Taiwan this year, involving naval, aerial, and missile forces. This move comes in direct response to increased U.S. arms deliveries to Taipei, including advanced missile systems and armored vehicles. Beijing’s intensified military pressure signals its determination to deter Taiwan’s defensive buildup and test Washington’s commitment to Taipei.

Meanwhile, Taiwan is enhancing its defense posture by integrating new U.S.-supplied missile systems, reinforcing its coastal defense capabilities. These developments indicate that Taipei is moving toward a long-term asymmetric warfare strategy, which could provoke further Chinese military responses.

U.S.-China Economic Confrontation: Energy, Investment, and Supply Chains

China has expanded its retaliatory tariffs on U.S. liquefied natural gas (LNG), coal, and high-tech components, further disrupting global supply chains. This move follows Beijing’s earlier energy tariffs on U.S. crude oil and signals a strategic effort to diversify China’s energy dependencies, increasing reliance on Russian, Australian, and Middle Eastern suppliers.

At the same time, the U.S. is tightening investment restrictions on Chinese firms in the semiconductor and AI sectors, marking another step in the technology decoupling between Washington and Beijing. These measures are expected to further fragment global capital markets and accelerate China's push for self-reliance in advanced technologies.

China Expands Strategic Influence in the Pacific and Middle East

China is deepening its geopolitical outreach, with diplomatic moves in both the Pacific Islands and the Middle East. Chinese officials have held high-level talks with the Solomon Islands and Fiji, discussing expanded economic and security cooperation. Meanwhile, Beijing has strengthened energy ties with Saudi Arabia and the UAE, signaling an effort to enhance its strategic foothold in the Persian Gulf.

These developments indicate that China is broadening its global power projection, challenging Western influence in critical geopolitical regions.

Southeast Asia’s Economic Shifts: Vietnam’s Nuclear Energy Expansion and Indonesia’s Fiscal Policies

Vietnam has entered negotiations with the U.S. and Japan on nuclear energy cooperation, marking a major shift in its energy policy. This move aligns with Hanoi’s strategy to reduce reliance on Chinese energy supplies while securing long-term partnerships with Western allies.

Meanwhile, Indonesia is implementing new fiscal policies to stabilize its economy amid global trade disruptions. Jakarta’s latest measures focus on enhancing domestic investment incentives while maintaining strict capital controls, reflecting a careful balancing act between economic growth and financial stability.

Security Threats: Baloch Insurgency and North Korea’s Military Posturing

The Balochistan insurgency in Pakistan has intensified, with separatist militants attacking Chinese infrastructure projects and security installations. This escalation raises concerns over the security of China’s Belt and Road Initiative (BRI) investments in South Asia.

Simultaneously, North Korea has increased military activity, with reports indicating potential missile tests in the coming weeks. Pyongyang’s latest statements suggest an imminent show of force, further destabilizing the Korean Peninsula.

Looking Ahead: A Region on Edge

The Asia-Pacific is on the verge of a major geopolitical realignment, with military conflicts, economic confrontations, and shifting alliances shaping the regional landscape. The risk of military miscalculation, trade disruptions, and diplomatic confrontations is at its highest level in years.

Geopolitical Risk Assessment for the Asia Pacific
(19-02-2025)

The Asia-Pacific region continues to experience heightened geopolitical instability as military escalations, economic battles, and strategic realignments unfold across multiple fronts. The Taiwan crisis remains the most immediate security concern, with China intensifying military operations and the U.S. expanding arms support. Meanwhile, the U.S.-China economic war is deepening, with new energy tariffs, technology sanctions, and investment controls reshaping global markets. Southeast Asia is undergoing economic shifts, with Vietnam expanding nuclear energy cooperation and Indonesia adjusting fiscal policies to stabilize growth. Additionally, China’s strategic expansion into the Pacific and Middle East is causing alarm among Western allies, while Baloch insurgents and North Korean military actions add to regional security risks. With these developments, the potential for miscalculation, conflict, and economic fragmentation remains at a critical level.

Geopolitical Risk Index

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

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