Global Risk Indexes (28-02-2025)

Asia-Pacific at Breaking Point: China Escalates Threats Against Taiwan, North Korea Declares Nuclear Readiness, and Trade War Intensifies

The Asia-Pacific is entering a period of heightened geopolitical volatility, with multiple military and economic flashpoints emerging simultaneously. China is intensifying its threats against Taiwan, the South China Sea is becoming increasingly militarized, and North Korea’s nuclear rhetoric is escalating. Meanwhile, trade tensions are mounting as the U.S. implements new protectionist measures, threatening regional economic stability.

China’s Taiwan Strategy: Military Escalation and Hybrid Warfare

China’s military drills near Taiwan, combined with an official statement that 'Taiwan will be reunified sooner or later,' indicate a shift toward a more aggressive posture. These actions suggest that Beijing is laying the groundwork for sustained military pressure on Taiwan, reinforcing the psychological dimension of its strategy.

The detention of a Chinese-linked cargo vessel suspected of severing an undersea cable near Taiwan is a clear sign of hybrid warfare tactics. While China denies involvement, such incidents could become a regular feature of Beijing’s pressure campaign, undermining Taiwan’s critical infrastructure without engaging in direct military action.

The long-term implication is a gradual normalization of Chinese military activity around Taiwan, making it more difficult for Taipei and its allies to draw red lines against future incursions.

South China Sea: China’s Pressure on the Philippines and U.S. Military Expansion

China’s renewed demand for the removal of U.S. missile systems from the Philippines is part of a broader strategy to push back against the growing U.S.-Philippines military alliance. Beijing views the deployment of U.S. 'Typhon' missiles as a direct threat to its regional power projection.

If Manila refuses, Beijing may increase military patrols, conduct naval blockades, or use economic coercion to force compliance. This situation raises the risk of a military standoff in the South China Sea, particularly if U.S. forces escalate their presence in response to China’s pressure campaign.

Over the long term, this confrontation could set the stage for a new regional arms race, with ASEAN nations increasing their defense spending in response to China’s assertiveness.

North Korea’s Nuclear Strategy: Pyongyang’s Full Readiness Doctrine

North Korea’s latest missile test and declaration of 'full nuclear readiness' signal a fundamental shift toward a permanent wartime footing. Pyongyang’s rhetoric suggests that it views nuclear deterrence as its primary tool for ensuring regime survival.

This escalation raises concerns that North Korea may adopt a more aggressive posture in regional conflicts, potentially involving limited-scale military provocations against South Korea or Japan.

Additionally, North Korea’s deepening military ties with Russia increase the likelihood that Pyongyang will gain access to advanced missile technologies, further destabilizing the balance of power in East Asia.

Thailand’s Uyghur Deportation: A New Front in the U.S.-China Rivalry

Thailand’s decision to forcibly deport 40 Uyghurs to China has triggered a diplomatic backlash from the U.S. and Australia. This incident highlights how Southeast Asian nations are increasingly caught in the U.S.-China geopolitical struggle.

Washington is likely to reassess its security and economic ties with Bangkok, potentially imposing diplomatic or economic measures in response. Meanwhile, China’s influence over Thailand may strengthen, increasing Beijing’s leverage in the region.

Global Trade War: U.S. Tariffs and Asia’s Economic Uncertainty

The Trump administration’s decision to impose new tariffs on China, Mexico, and Canada marks a significant escalation in global trade tensions. Asia’s export-driven economies, particularly Taiwan, Vietnam, and South Korea, are likely to suffer from increased trade uncertainty.

China may respond with retaliatory tariffs, currency devaluation, or restrictions on rare earth exports, exacerbating global economic fragmentation.

If these trade measures expand further, they could accelerate the formation of a bifurcated global economy, where supply chains realign along geopolitical lines.

Singapore Strait Security: Maritime Threats Resurface

The attack on a Singapore-registered chemical tanker raises serious concerns about the security of global shipping routes. The Singapore Strait is one of the world’s busiest maritime corridors, and any sustained increase in piracy or attacks could disrupt energy and trade flows.

If such incidents persist, regional navies may be forced to increase security patrols, leading to greater military engagement in key maritime chokepoints.

Looking Ahead: An Unstable Regional Order

The Asia-Pacific is moving toward a period of sustained economic, military, and diplomatic instability. With China’s Taiwan strategy intensifying, the South China Sea becoming more militarized, and North Korea pursuing an aggressive nuclear doctrine, the region is at heightened risk of strategic miscalculations.

Meanwhile, U.S. trade policies and China’s economic responses could reshape global supply chains, affecting long-term economic stability. The next few weeks will be critical in determining whether these tensions continue escalating or stabilize.

Geopolitical Risk Assessment for the Asia Pacific
(28-02-2025)

The Asia-Pacific region remains on edge as geopolitical and economic tensions continue to escalate. China's military drills near Taiwan have intensified, with Beijing issuing direct threats of reunification, raising fears of hybrid warfare. The South China Sea standoff is worsening as China continues pressuring the Philippines over U.S. missile deployments. North Korea has further escalated its military posture, launching strategic cruise missiles and declaring full nuclear readiness. Meanwhile, Thailand's secretive deportation of Uyghurs to China has sparked a diplomatic rift with the U.S. and Australia. Economically, Taiwan faces trade uncertainty due to U.S. tariff threats, while Hong Kong's property sector remains under severe stress. The Trump administration's latest tariffs on China, Mexico, and Canada signal a hardening global trade war, threatening Asia's export-driven economies. With military, economic, and diplomatic crises unfolding simultaneously, the region remains highly vulnerable to strategic miscalculations, trade disruptions, and security escalations.

Geopolitical Risk Index

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

Previous Briefings

• Asia-Pacific at Breaking Point: China Escalates Threats Against Taiwan, North Korea Declares Nuclear Readiness, and Trade War Intensifies - (28-02-2025)
• Asia-Pacific Faces Intensified Military and Economic Pressures: Taiwan on High Alert, China-Philippines Standoff, and North Korea-Russia Military Ties Deepen - (27-02-2025)
• Asia-Pacific on Edge: China Pressures Philippines, Taiwan Faces Hybrid Threats, and North Korea Expands Military Buildup - (26-02-2025)
• Asia-Pacific Faces Heightened Geopolitical Risks: U.S.-China AI Battle, South China Sea Escalations, and Vietnam’s Economic Uncertainty - (25-02-2025)
• Asia-Pacific Tensions Escalate: South China Sea Confrontations, Political Unrest in Bangladesh, and Economic Uncertainty in Southeast Asia - (24-02-2025)
• Asia-Pacific on the Brink: Taiwan Crisis Worsens, South China Sea Flashpoints Expand, and Economic Battles Deepen - (23-02-2025)
• Asia-Pacific Tensions Escalate: North Korea Threatens Retaliation, China Expands Global Reach, and South China Sea Conflicts Deepen - (22-02-2025)
• Asia-Pacific Faces Heightened Military Tensions, U.S.-China Economic Shifts, and Deepening Regional Political Uncertainty - (21-02-2025)

See all previous briefings