Global Risk Indexes (09-03-2025)

Global 97 (0 —)
MENA 99 ( —)
APAC 98 (+1 ▲)
Europe 98 ( —)
Africa 97 ( —)
AMERs 95 ( —)
Markets 97 (+1 ▲)
Mei Ling, Asia Pacific region analyst at Worldwise Analytica

Mei Ling

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

Asia-Pacific in Crisis Mode: China Expands Influence, Security Tensions Rise, and Economic Shocks Intensify

The Asia-Pacific is undergoing a significant realignment of military, economic, and political power. China is expanding both its military budget and legal enforcement capabilities, security crises are deepening across South and Southeast Asia, and global trade disruptions are reshaping economic alliances. These developments signal a period of heightened instability and strategic competition.

China’s Military Expansion and Legal Enforcement Beyond Borders

China has raised its defense budget by 7.2%, reinforcing its military modernization and strategic presence in the South China Sea. At the same time, Beijing has escalated its legal pressure against pro-independence Taiwanese activists, extending its enforcement efforts beyond its borders.

This two-pronged approach—military expansion coupled with legal coercion—demonstrates Beijing’s intent to tighten control over its strategic interests. If China continues expanding its legal reach, more Taiwanese citizens and businesses may face increased risks in China-friendly nations.

Security Volatility: South and Southeast Asia in Crisis

Security conditions have deteriorated across multiple fronts. Pakistan has issued a March 31 deadline for undocumented Afghan refugees to leave, raising humanitarian and security concerns. This decision could exacerbate border tensions and increase retaliatory actions from Afghan-based militant groups.

In Bangladesh, the Rohingya refugee crisis is worsening as the UN’s World Food Programme warns of severe food ration cuts due to funding shortages. Without additional aid, the situation risks fueling instability within refugee camps and creating long-term security challenges for Dhaka.

Meanwhile, Myanmar’s military junta has announced an election timeline for late 2025, despite ongoing resistance from ethnic militias and pro-democracy groups. This move is unlikely to stabilize the country, as armed groups remain entrenched in conflict.

Trade Wars and Economic Disruptions: Global Markets in Flux

Economic uncertainty is deepening as global trade tensions escalate. China has imposed $2.6 billion in retaliatory tariffs on Canadian agricultural imports, further fragmenting global supply chains. This move signals Beijing’s willingness to weaponize economic leverage against countries aligning with Western trade policies.

In Japan, U.S. tariffs on Canadian aluminum have disrupted supply chains, impacting manufacturing sectors. Meanwhile, Taiwan has reported a 31.5% surge in exports, driven by AI demand and preemptive stockpiling ahead of potential U.S. trade measures.

In South Asia, Sri Lanka has secured a $2.5 billion debt restructuring agreement with Japan, a critical step in stabilizing its post-crisis economy. However, the deal underscores Colombo’s need to diversify its financial partnerships to reduce long-term reliance on Chinese loans.

Geopolitical Flashpoints: Evolving Military Alliances

The Indo-Pacific military landscape is shifting. The Philippines has formalized a Visiting Forces Agreement (VFA) with Canada, reinforcing its defense network amid South China Sea tensions. This follows similar agreements with the U.S., Japan, and Australia, signaling Manila’s intent to strengthen alliances against Beijing’s growing influence.

Meanwhile, New Zealand has raised alarms over China’s growing influence in the Pacific, particularly in the Cook Islands. This reflects Wellington’s increasing concern over Beijing’s strategic inroads into small Pacific nations.

Looking Ahead: Asia-Pacific on the Brink of Long-Term Strategic Shifts

The Asia-Pacific is at a critical inflection point, with escalating military preparations, economic fragmentations, and political instability shaping the region’s trajectory. The coming months will determine whether these conflicts stabilize or push the region toward further fragmentation.

Geopolitical Risk Assessment for the Asia Pacific
(09-03-2025)

The Asia-Pacific region remains highly volatile, with escalating military posturing, economic fragmentation, and security crises. China has intensified both its military and economic influence, increasing its defense budget by 7.2%, reinforcing legal enforcement measures against Taiwanese independence activists, and imposing retaliatory tariffs on Canada amid growing global trade conflicts. Meanwhile, security tensions are worsening in South and Southeast Asia, with Pakistan enforcing mass deportations of Afghan refugees, Bangladesh struggling with the Rohingya aid crisis, and Myanmar’s military junta announcing elections despite ongoing armed resistance. Economic disruptions are mounting as U.S. tariffs impact Japan’s manufacturing sector, Taiwan experiences an export surge driven by AI demand and trade fears, and Sri Lanka secures a $2.5 billion debt restructuring deal with Japan. In the Indo-Pacific, military alliances are evolving, with the Philippines and Canada strengthening defense ties, and New Zealand raising alarms over China’s growing influence in the Pacific. With economic instability, military confrontations, and diplomatic shifts converging, the risk of **strategic miscalculation, regional instability, and long-term economic realignments remains critically high**.

Geopolitical Risk Index

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

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