Global Risk Indexes (05-03-2025)

Global 98 (0 —)
MENA 99 ( —)
APAC 98 ( —)
Europe 98 (-1 ▼)
Africa 96 (-1 ▼)
AMERs 97 (-1 ▼)
Markets 99 ( —)
Mei Ling, Asia Pacific region analyst at Worldwise Analytica

Mei Ling

Empowering minds, shaping decisions: Insights from the heart of geopolitics

Asia-Pacific at a Strategic Crossroads: China’s Military Expansion, South China Sea Confrontations, and Pakistan-Afghanistan Border Clashes

The Asia-Pacific is witnessing intensifying security dilemmas, economic realignments, and political shifts as China expands its military spending, South China Sea tensions rise, and Pakistan grapples with growing instability. These developments are reshaping the region’s power balance and increasing the risk of prolonged geopolitical fragmentation.

China’s Military Expansion: Defense Budget Increase and Taiwan Threats

China has announced a 7.2% increase in its defense budget, reinforcing its commitment to military modernization amid rising tensions with the U.S. and Taiwan. This latest budget surge comes as Beijing continues to advocate for “peaceful reunification” with Taiwan, while increasing its naval and air force presence around the island.

China’s simultaneous economic stimulus measures suggest that Beijing is preparing for a long-term strategic competition with the West, balancing military expansion with domestic stability efforts.

Philippines-China Maritime Confrontation: Rising Risks in the South China Sea

The Philippines is facing increased Chinese surveillance as it continues resupply missions to its military outpost at Second Thomas Shoal. China’s naval forces have been closely monitoring Philippine movements, raising fears of a potential confrontation.

With the Philippines solidifying defense ties with the U.S. and Japan, the South China Sea remains a high-risk flashpoint where an unintended military incident could trigger broader escalations.

Pakistan’s Economic Struggles Amid Rising Border Tensions

Pakistan is negotiating additional IMF financial assistance while facing increasing instability along its border with Afghanistan. Fresh border clashes have resulted in casualties and disrupted trade, further straining Islamabad’s efforts to stabilize its economy.

With militant activity rising, Pakistan may be forced to divert resources toward security operations, delaying critical economic reforms.

Japan’s Defense Policy: Balancing U.S. Pressure and Domestic Priorities

Japanese Prime Minister Shigeru Ishiba has rejected U.S. calls for a larger defense budget, despite growing regional threats from China and North Korea. Ishiba’s stance reflects domestic political concerns, as Japan’s public remains divided over expanding military spending.

However, Japan’s security commitments under its U.S. alliance may force Tokyo to gradually increase defense cooperation while maintaining a cautious approach to military expansion.

China’s Trade War Retaliation: Economic Stimulus and Countermeasures

China is implementing new fiscal stimulus policies to counteract the economic slowdown caused by U.S. tariffs. Beijing has also announced new tariffs on U.S. agricultural goods and imposed restrictions on U.S. firms operating in China.

These measures signal that China is prepared for a prolonged economic confrontation, forcing Asian economies to reassess their trade dependencies.

Thailand’s Uyghur Deportation: Diplomatic Fallout with the West

Reports have emerged that Thailand ignored asylum offers from the U.S. and Canada before deporting Uyghur refugees to China. The decision has triggered international condemnation, increasing diplomatic tensions between Bangkok and Western allies.

Thailand now faces a delicate balancing act, as it risks weakening its strategic ties with the West while maintaining economic dependence on China.

Looking Ahead: A Region Facing Multiple Security and Economic Challenges

The Asia-Pacific remains highly volatile, with expanding military alliances, economic countermeasures, and political tensions shaping the regional landscape. The coming weeks will be crucial in determining whether these crises stabilize or escalate further.

Geopolitical Risk Assessment for the Asia Pacific
(05-03-2025)

Geopolitical and economic tensions continue to escalate across the Asia-Pacific, with military buildups, trade confrontations, and regional conflicts shaping the strategic landscape. China’s 7.2% defense budget increase underscores its growing military ambitions, particularly as it reinforces threats toward Taiwan and intensifies maritime operations in the South China Sea. The Philippines-China confrontation over disputed waters remains a flashpoint, with Beijing closely monitoring Philippine resupply missions to Second Thomas Shoal. Meanwhile, Pakistan is struggling to balance economic recovery efforts with worsening border clashes with Afghanistan, as militant activity threatens regional stability. In Japan, Prime Minister Ishiba is resisting U.S. pressure to expand defense spending, despite growing regional threats from China and North Korea. South Korea is exploring a strategic energy partnership with the U.S. to secure long-term LNG supplies. Additionally, China is launching new economic stimulus measures to counteract U.S. tariffs and slow economic growth. Thailand is facing mounting criticism for its deportation of Uyghurs to China, sparking tensions with Western allies. Extreme weather events, including flooding in Indonesia and an intensifying cyclone in Australia, highlight climate vulnerabilities in the region. With multiple security flashpoints and economic uncertainties converging, the risk of strategic miscalculation, trade disruptions, and military escalation remains critically high.

Geopolitical Risk Index

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

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