Global Risk Indexes (20-02-2025)

Global 98 (0 —)
MENA 99 (+1 ▲)
APAC 98 ( —)
Europe 98 ( —)
Africa 98 ( —)
AMERs 97 (-1 ▼)
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 Enters Dangerous New Phase: Taiwan Tensions Peak, U.S.-China Economic War Deepens, and Military Confrontations Expand

The Asia-Pacific is experiencing a dangerous escalation across multiple geopolitical fronts, with military, economic, and strategic developments converging. The Taiwan crisis is reaching a critical threshold, U.S.-China economic tensions are deepening, and regional conflicts in the South China Sea and beyond are intensifying.

Taiwan Crisis: China’s Military Pressure and U.S. Arms Sales

China has deployed warships and fighter jets near Taiwan in its largest military show of force this month, as Beijing continues to respond aggressively to Taiwan’s increasing defense capabilities. This escalation follows the U.S. approval of additional arms sales to Taipei, including precision-guided munitions and air defense systems. The growing military activity underscores the rising risk of accidental conflict or preemptive action by Beijing.

Meanwhile, Taiwan is accelerating its indigenous missile defense programs, emphasizing its long-term strategy of asymmetric warfare. With Taipei receiving expanded military support from Washington and its allies, the likelihood of direct military confrontations in the Taiwan Strait is increasing.

U.S.-China Economic War: Energy, Trade, and Financial Retaliation

The U.S.-China trade war continues to expand, with both sides introducing new tariffs and economic restrictions. China has further reduced its LNG and coal imports from the U.S., intensifying global energy market disruptions. At the same time, Washington is considering imposing tariffs on Vietnamese exports, creating new uncertainties for Southeast Asian economies.

Financial markets are also feeling the impact of increased U.S. scrutiny on Chinese financial institutions, which could further restrict Chinese capital flows and force Beijing to pursue alternative financial alliances.

South China Sea: China-Vietnam and China-Philippines Confrontations

China has increased its maritime patrols near Vietnamese-claimed waters, leading to direct diplomatic protests from Hanoi. This move is part of Beijing’s strategy to assert dominance over disputed territories while testing Vietnam’s response capabilities.

Simultaneously, the Philippines has accused China of deploying paramilitary vessels near its territorial waters, escalating tensions between the two nations. The likelihood of maritime skirmishes in the South China Sea is increasing as regional actors resist Beijing’s assertive tactics.

North Korea Signals Nuclear Escalation in Response to AUKUS

North Korea has issued a strong warning against the AUKUS alliance, calling it a “direct provocation” and signaling potential nuclear countermeasures. Pyongyang’s rhetoric suggests that it may conduct additional missile tests in the coming weeks as a show of force.

Vietnam’s Economic Strategy and U.S. Trade Pressures

Vietnam is navigating a complex economic landscape, with new U.S. tariff threats prompting Hanoi to explore trade diversification strategies. At the same time, Vietnam’s ongoing nuclear energy discussions with Japan and the U.S. signal a long-term shift toward energy independence and regional cooperation.

Indonesia’s Trade Deficit and Economic Vulnerabilities

Indonesia is experiencing a widening trade deficit, raising concerns over its economic stability amid declining global demand. Jakarta is expected to introduce new policy measures to stabilize trade and attract foreign investment, but uncertainty remains high.

Saudi Aramco Expands Influence in Southeast Asia

Saudi Aramco is expanding its refining and petrochemical investments in Southeast Asia, strengthening its role as a key energy supplier to the region. This move reinforces long-term energy dependencies while deepening Saudi strategic partnerships with ASEAN nations.

Looking Ahead: A Region at the Brink

The Asia-Pacific is on the verge of a major geopolitical shift, with escalating conflicts, trade disruptions, and strategic realignments defining the regional order. The risk of military miscalculation, economic fragmentation, and intensified diplomatic conflicts is reaching unprecedented levels.

Geopolitical Risk Assessment for the Asia Pacific
(20-02-2025)

The Asia-Pacific region is facing unprecedented geopolitical turbulence, with intensifying military tensions, economic disruptions, and diplomatic maneuvering shaping the regional landscape. The Taiwan Strait remains a high-risk flashpoint as China escalates its military presence and the U.S. expands arms sales to Taipei. Meanwhile, the U.S.-China economic war is accelerating, with new tariffs, energy market realignments, and retaliatory financial measures. South China Sea tensions continue to escalate, with confrontations between China, Vietnam, and the Philippines. North Korea is signaling nuclear escalation in response to the AUKUS alliance, while Indonesia and Vietnam are adjusting their economic strategies amid rising global trade uncertainty. Additionally, Saudi Aramco’s expansion in Southeast Asia is reinforcing long-term energy dependencies and strategic partnerships. With these converging risks, the likelihood of military miscalculation, economic fragmentation, and strategic confrontations is at a critical level.

Geopolitical Risk Index

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

Previous Briefings

See all previous briefings