Japan has crossed an important threshold in its postwar security policy, formally opening the way for exports of lethal military equipment after scrapping the “five category” rule that had long confined defense transfers to non-combat uses.

The legal change matters less for its bureaucratic wording than for what it signals: Tokyo no longer sees defense exports as an embarrassing exception to be narrowly managed, but as a strategic necessity. The old framework reflected a Japan still constrained by postwar political instincts. The new one reflects a Japan that believes the regional balance has deteriorated enough to justify treating its defense industry as part of national power.

Under the revised Three Principles on the Transfer of Defense Equipment and Technology, exports will now be judged through a new distinction between “weapons” and “non-weapons.” Major systems such as destroyers and submarines will still require National Security Council approval, and transfers will be limited to 17 countries with existing defense equipment agreements, including the Philippines and Indonesia. But the larger shift is clear: the default posture has changed from avoidance to conditional enablement.

Tokyo is justifying the move on two grounds. The first is industrial. A defense sector that cannot export is expensive to maintain, hard to scale, and vulnerable in any prolonged contingency. The second is geopolitical. If Japan wants tighter security cooperation with like-minded states, shared equipment and supply networks matter. Interoperability is not just about joint exercises; it is also about whether partners can sustain operations with compatible platforms and components when a crisis actually comes.

Prime Minister Sanae Takaichi’s insistence that Japan remains a peace-oriented nation is politically necessary, but it also misses the deeper point. This is not a repudiation of pacifist language so much as its quiet dilution. Japan is still avoiding the symbolism of becoming a conventional arms exporter without restraint, but it is increasingly willing to behave like a normal middle power operating in a dangerous neighborhood.

The most consequential part of the revision may be the ambiguity. The government says exports to countries at war remain banned, yet it has left room for “special circumstances,” a phrase broad enough to matter in a regional emergency. That suggests Tokyo wants legal flexibility without fully admitting how far it may eventually go.

My read: this is less a sudden break than the formal recognition of a trend already underway. Japan has been moving steadily toward a more hard-edged view of security for years. What changed Tuesday is that the state is now aligning its export rules with that reality.

South Korea already built the model Japan is now moving toward

Japan’s shift on arms exports looks dramatic because of its postwar history, but in practical terms it is entering terrain South Korea has occupied for years. Seoul has already turned defense exports into a pillar of statecraft, using overseas sales to scale production, lower unit costs, and deepen security relationships. Japan is only now beginning to accept that defense manufacturing cannot remain strategically useful if it is locked inside a purely domestic market.

The comparison is uncomfortable for Tokyo. South Korea’s defense exports have surged from roughly $3 billion annually in the mid-2010s to more than $14$14$14 billion in orders in 2022, driven by deals for K2 tanks, K9 howitzers, and FA-50 light combat aircraft. Poland alone signed framework agreements in 2022 covering hundreds of tanks and howitzers. By contrast, Japan’s arms export regime remained so restrictive that even when rules were loosened in the past decade, actual transfers stayed limited and politically sensitive.

That matters because Southeast Asia is becoming a key market for middle-power defense diplomacy. If Japan wants to compete there, it is no longer enough to offer development aid, coast guard assistance, or political goodwill. It needs a faster and more commercially viable defense export system. South Korea has already shown that arms exports can translate into influence. Japan is now, belatedly, drawing the same conclusion.

The Philippines is the clearest frontline partner

If Japan is looking for a test case for its new export framework, the Philippines is the obvious candidate. No Southeast Asian country has been more exposed to direct Chinese maritime pressure in recent years, and no U.S. partner in the region has moved faster to rebuild external defense ties. That makes Manila both strategically important and politically easier for Tokyo to justify.

The two countries already have a growing security relationship. Japan has provided coastal surveillance radars to the Philippines, expanded joint exercises, and supported maritime capacity-building. The Philippines has also granted the U.S. access to nine sites under the Enhanced Defense Cooperation Agreement, up from five previously, underscoring how central it has become to the regional deterrence network. Meanwhile, repeated confrontations at Second Thomas Shoal and elsewhere have made clear that Manila needs more than diplomatic backing.

The significance of Japan’s shift is that it could now move beyond the old caution that kept transfers tightly boxed into non-combat functions. Even if the first wave remains limited to surveillance systems, patrol-related equipment, or dual-use platforms, the political threshold has changed. Japan is starting to treat the defense capacity of partners like the Philippines as part of its own security environment, not just something to support from a distance.

Indonesia is the harder but more revealing test

Indonesia matters for a different reason. The Philippines fits neatly into the story of frontline balancing against China; Indonesia does not. Jakarta still prefers strategic ambiguity, avoids formal alignment, and frames its security choices in terms of autonomy. If Japan can build meaningful defense export ties with Indonesia under those conditions, it will show that its new policy is not only about supporting countries already in open friction with Beijing.

Indonesia is Southeast Asia’s largest economy and has a population of around 280 million, giving it weight that goes beyond any single procurement deal. It has pursued military modernization across air, naval, and missile domains while trying to diversify suppliers. That makes it attractive to every major defense exporter. For Japan, success in Indonesia would signal that it can become a durable part of the region’s defense industrial ecosystem rather than a niche provider to a few politically aligned partners.

This is where Tokyo’s new rules will face a market test. Strategic logic alone will not be enough. Japanese firms will have to prove they can compete on price, delivery timelines, maintenance, and financing. If they cannot, the policy shift will remain geopolitically important but commercially thin. If they can, Japan will start to gain a kind of influence in Southeast Asia that is subtler than alliance politics but potentially more enduring.

China will see encirclement, but its own behavior drove this

Beijing is unlikely to read Japan’s move as a technical policy update. It will see it as another step in the consolidation of a regional security order designed to constrain China’s rise. That interpretation is predictable, but it also leaves out the key point: China’s own coercive behavior has made policies like this easier to sell across Asia.

The background is hard to ignore. China has intensified military pressure around Taiwan, maintained regular coast guard and maritime militia operations in disputed waters, and continued pressure near the Senkaku Islands in the East China Sea. Japan’s defense budget trajectory already reflected that shift. Tokyo has been moving toward a target of around 2% of GDP in defense spending by 2027, roughly doubling spending from previous levels over a five-year period. The arms export revision sits inside that broader strategic turn.

So while Beijing will denounce Japanese “militarization,” the accusation has lost some of its force in the region. Many Asian states now see Japanese normalization as reactive rather than revisionist. That does not mean they are comfortable with every step Tokyo takes. It means the old fear of Japan has been increasingly overtaken by the more immediate reality of Chinese power.

Washington wants allies that can produce security, not just consume it

From Washington’s perspective, Japan’s decision is not just welcome; it is overdue. The United States has spent the past several years pushing allies to strengthen their own defense industrial bases, raise military spending, and develop capabilities that can function in a real contingency. That logic has become sharper as U.S. planners focus on the scale of a possible Indo-Pacific conflict.

The war in Ukraine exposed a broader problem: even advanced economies struggle to sustain high-intensity military production over time. Munitions stockpiles deplete quickly, production lines take time to expand, and supply chains become strategic vulnerabilities. Those lessons have carried directly into Asian planning. Japan’s decision to treat defense exports as part of industrial resilience suggests Tokyo now accepts that wartime sustainability depends not just on what a country fields today, but on what it can build and share tomorrow.

This is the real strategic backdrop. The United States is still the central security actor in the Indo-Pacific, but it increasingly wants a networked system in which allies help generate capacity. Japan’s export reform fits that model. It is less about selling weapons for profit alone than about building a defense ecosystem that can hold together under stress.

Asia’s middle powers are becoming more comfortable with hard power

The wider trend goes beyond Japan. Across the region, middle powers are showing a greater willingness to connect industrial policy, deterrence, and strategic alignment. They still use cautious language — resilience, stability, capacity-building — but the substance is becoming harder-edged.

Australia has expanded defense cooperation through AUKUS and major missile and shipbuilding plans. South Korea has turned its arms industry into an export engine. India continues to push defense indigenization while broadening security ties with the U.S. and its partners. Japan’s policy change fits this pattern: a region that once relied heavily on economic integration and U.S. primacy is now preparing more seriously for prolonged strategic competition.

One useful data point is military spending. According to SIPRI trendlines over recent years, Asia and Oceania have remained one of the fastest-growing regions for defense expenditure, with China, India, Japan, South Korea, and Australia all increasing spending in response to a more contested security environment. The exact numbers matter less than the direction. The region’s major players are not demobilizing into interdependence; they are rearming under it.

When Airspace Becomes Leverage: China, Taiwan, and a Canceled Visit

A recent episode involving Taiwan President Lai Ching-te highlights how the contest between Beijing and Taipei is expanding into new domains.

Seychelles, Mauritius, and Madagascar denied overflight access to Lai’s aircraft, forcing him to cancel a planned visit to Eswatini. China welcomed the move as support for the One China principle. Taiwan, in contrast, described it as political coercion.

On the surface, this looks procedural. In reality, it signals a shift. Taiwan’s leaders have long managed international travel even without formal diplomatic recognition from transit countries. Blocking airspace access moves beyond symbolic isolation and into direct operational constraint.

The destination itself matters.

Eswatini is a small, landlocked country in southern Africa, bordered by South Africa and Mozambique. It is also the last African state that maintains official diplomatic ties with Taiwan. Over the past few decades, nearly every other country on the continent has switched recognition to Beijing, largely driven by economic incentives and political alignment.

For Taiwan, relationships like the one with Eswatini are not just ceremonial. They are central to maintaining formal international space. Presidential visits serve to reinforce these ties through development aid, political engagement, and visibility on the global stage.

Lai’s trip was meant to do exactly that. Strengthen one of Taiwan’s remaining partnerships and signal continued diplomatic relevance.

The disruption of that visit points to something broader. China is not only limiting Taiwan’s recognition but also increasingly shaping the conditions under which it can operate internationally. Its influence now reaches into decisions made by countries geographically distant from the Taiwan Strait, affecting even the logistics of travel.

What stands out is the compliance of states with limited direct stakes in cross-strait tensions. Their decisions suggest that alignment with Beijing is often driven less by ideology and more by material considerations and long-term strategic positioning.

In that sense, this was not just a canceled trip. It was a demonstration of how pressure on Taiwan is becoming more practical, more global, and harder to bypass.

Thank you for reading!

If you only remember three numbers from the last 24 hours, make them these:

• 109 – the Brent crude price in early Monday trading, up roughly 50% since the Iran war began.

• >90% – how much maritime traffic through the Strait of Hormuz has collapsed compared with a year ago.

• 3,100+ – the combined war dead in Iran and Lebanon so far, with millions displaced.

For Asia, that’s not “somebody else’s war.” It is a live‐fire stress test of energy security, sea‑lane protection and economic resilience.

1. Hormuz shockwaves: Asia’s risk is now quantified

Overnight, U.S. and Israeli airstrikes on Iranian cities killed more than 25 people, hitting sites from Tehran’s Sharif University gas facility to residential neighborhoods in Eslamshahr, Qom and other cities. One strike near Eslamshahr alone killed at least 13 people; another in Qom killed 5, with 6 reported dead in additional cities and further casualties when a home in Tehran was hit.

Iran’s answer was to fire missiles at Israel and Gulf Arab states as U.S. President Donald Trump’s Tuesday deadline to reopen the Strait of Hormuz looms. In parallel, Tehran has let some ships pass while blocking vessels from the U.S., Israel and “allied” countries; overall traffic through Hormuz is down by more than 90% compared with the same period last year. That effectively weaponizes a chokepoint that normally carries around one‑fifth of global oil consumption in peacetime.

The market response is already visible in Asia. Brent crude has jumped to around 109 dollars a barrel, about 50% higher than when this war began five weeks ago. Asian equities that were open on Monday actually rose, suggesting investors are betting on eventual de‑escalation, but AP’s live tally puts the death toll at over 1,900 people in Iran and more than 1,200 in Lebanon, with millions of civilians displaced and fuel prices surging across the region.

For ports, airports and logistics operators, this is moving from abstract tail risk to base case. A Fitch Ratings assessment warns that prolonged Iran‑linked disruption to shipping routes and airspace will have “mixed but increasingly negative” credit effects on Asia‑Pacific ports and airports. The main tail‑risk scenario they flag is exactly what we are now flirting with: an extended or repeated closure of Hormuz that amplifies volume and cost shocks across energy, bulk and container supply chains.

A few Asia‑specific takeaways for readers who think in balance sheets and flight schedules rather than war maps:

• Indian ports are projected to face volume pressure if disruption continues, as freight rates, port congestion and scheduling chaos rise, even if the macro hit is “manageable” in the base case.

• Chinese importers will need longer‑haul replacement cargoes if Gulf supply stays unreliable, which means higher shipping and insurance costs baked into every barrel and container.

• Asian airports, especially in India, are likely to see traffic volatility as airlines cut or reroute West Asia flights and adjust fares for the new jet‑fuel reality.

Policy angle: for defense ministries, the headline is that sea‑lane protection and Gulf basing access are no longer luxury topics reserved for strategy papers. They are now directly linked to inflation, balance‑of‑payments risk and domestic political stability in Delhi, Tokyo, Seoul and beyond.

2. Taiwan: “Peace mission” optics vs. hard power arithmetic

While missiles arc over West Asia, Taipei is dealing with its own balancing act: an opposition “peace” visit to Beijing against the backdrop of stalled defense spending.

Taiwan’s main opposition leader Cheng Li-wun from the Kuomintang (KMT) is due in China this week for what is billed as a five‑day “peace mission,” the first such trip by a KMT chair in years. It comes just as Beijing has steadily increased military pressure around the island and as Taiwan’s opposition‑controlled parliament has been dragging its feet on a major extra defense budget sought by the government and encouraged by Washington.

The numbers behind the politics matter:

• Taiwan’s military has already warned that delays in approving funds are threatening around 2.4–3.1 billion dollars in weapons purchases and training, including elements of critical U.S. arms packages.

• The legislature only recently authorized the government to proceed with 9 billion dollars in previously stalled U.S. arms deals, underscoring how much is already backlogged even before you factor in any new spending.

Beijing will try to spin this week’s visit as proof that “peaceful reunification” has real support within Taiwan’s political class, especially if it can stage images of smiles in the Great Hall of the People while PLA aircraft keep up their now‑routine drills around the island. The ruling Democratic Progressive Party, in turn, will argue that under‑funding deterrence while chasing symbolic dialogue only deepens the asymmetry across the Strait.

For policy insiders, the key question is not whether dialogue is good or bad—it is whether Taipei can credibly fund and field the asymmetric capabilities (mobile missiles, mines, air defense, resilient C2) that recent U.S. and Taiwanese strategy documents have called for, at the same time as one major party is normalizing high‑profile visits to Beijing. That is the kind of contradiction Beijing is very good at exploiting.

3. Korean Peninsula: one drone, one apology, and a nuclear backdrop

In Seoul, yesterday’s big security story wasn’t a missile launch but a drone flight—and an unusually contrite response.

South Korean President Lee Jae‑myung used a cabinet meeting on Sunday to express “regret” to North Korea after an investigation concluded that a civilian‑run drone operation had violated the North’s airspace, an incident Pyongyang had earlier treated as a serious provocation. Prosecutors have now charged a man in his 30s for illegally operating the drones, and the probe found that an employee of the National Intelligence Service and a serving military officer were involved, turning what might have been dismissed as a stunt into an institutional embarrassment.

Lee’s message was twofold: reassure Pyongyang that this was not official policy, and tell his own public that the South’s constitution does not allow individuals to freelance escalation against a nuclear‑armed neighbor. For North Korea, though, the episode is a propaganda gift: it can point to involvement by South Korean officials as proof that “hostile acts” are systemic, not isolated, while continuing to justify its own hypersonic missile tests and nuclear force build‑up proclaimed at a parliamentary session last month.

From a risk‑management perspective, the numbers are what make this unnerving: one unauthorized drone mission, one prosecutable case, and potentially one miscalculation away from a crisis in a theater where both sides now openly plan around tactical nuclear use rather than mere conventional skirmishes. That’s why Seoul is so keen to close this particular file quickly and publicly.

4. Why this matters if you’re in Delhi, Tokyo or Taipei

For subscribers who want to connect the dots rather than doomscroll, here’s how today’s data points translate into medium‑term questions:

• Delhi: With Hormuz shipping volumes down over 90% and Brent up 50%, India’s combination of energy import dependence and ambitions as a logistics hub will be under sustained pressure. How far can New Delhi lean on discounted flows from Russia and ad‑hoc Gulf diplomacy before it has to invest more in blue‑water naval capabilities and multilateral escort frameworks?

• Tokyo: Japanese growth is already being dented by war‑related energy costs and supply chain jitter; the same Fitch assessment flags rising costs and congestion risks for Asia‑Pacific ports and airports if disruption persists. Do Japanese voters tolerate the higher defence outlays and energy prices needed to de‑risk the system, or does economic pain erode support for the country’s security overhaul?

• Taipei: If Taiwan’s opposition can block or slow multi‑billion‑dollar defence packages while showcasing warm optics in Beijing, the island risks sending mixed signals about its willingness to pay the price of deterrence. That ambiguity is precisely what can invite more coercive PLA activity over time

If you’re trying to make sense of a world where the post-Cold War order is in full retreat, your bookshelf needs refreshing. I spent the last few days cross-referencing Publishers Weekly’s Spring 2026 catalog, publisher announcements, and advance review copies to separate the books that genuinely matter from the noise. Here’s what made the cut.

I am currently reading Chokepoints: American Power in the Age of Economic Warfare by Edward Fishman. Chokepoints is an excellent read that captures the current disruption to the global economy caused by ongoing conflicts.

THE CHINA BEAT

• The Wall Dancers: Searching for Freedom and Connection on the Chinese Internet — Yi-Ling Liu (Knopf, Feb 2026) Flips the lens inward and looks at how ordinary Chinese navigate state control and self-expression online. The contrast between Shambaugh’s macro view and Liu’s ground-level reporting is genuinely illuminating.

IRAN, THEN AND NOW

Stolen Revolution: Betrayal and Hope in Modern Iran — Bozorgmehr Sharafedin & Yeganeh Torbati (Doubleday, Jun 2026) Six dissidents profiled across five decades — from the 1979 revolution through the woman-life-freedom movement. Torbati and Sharafedin are Reuters journalists who covered Iran from the ground, and this reads like the book-length version of the reporting they've been doing while the rest of the world looked away.

ISRAEL & THE MIDDLE EAST RECKONING

• Israel: What Went Wrong? — Omer Bartov (FSG/Random House, Apr 23, 2026) Bartov is one of the world’s leading historians of the Holocaust and genocide. The question he asks here — how did a state founded after the Holocaust come to embrace ethnonationalism and face credible war crimes allegations — is one you can’t dodge if you want to understand this conflict. Not comfortable. Necessary.

ECONOMIC DISORDER AS GEOPOLITICS

• The Doom Loop: Why the World Economic Order Is Spiraling into Disorder — Eswar S. Prasad (Hurst Publishers, Feb 5, 2026) Prasad has been tracking global financial architecture at the IMF and Cornell for two decades. His argument: globalization didn’t just create winners and losers — it built the conditions for systemic instability, currency weaponization, and political backlash across continents. Trade wars aren’t trade policy anymore. They’re statecraft.

• The Information State: Politics in the Age of Total Control — Jacob Siegel (Henry Holt, Mar 24, 2026) Siegel argues that the fight against “disinformation” has itself become a control architecture — a fusion of tech platforms and state power that goes back to the post-9/11 “war on terror” playbook. Read this alongside Prasad and you’ll see the same pattern: infrastructure being weaponized faster than democratic institutions can adapt.

THE BROADER MAP

• How Africa Works: Success and Failure on the World’s Last Developmental Frontier — Joe Studwell (Grove Press, Feb 17, 2026) Studwell’s How Asia Works was quietly one of the best development economics books of the last decade because he actually went to the factories and talked to the policymakers. He does the same thing for Africa. Most Western analysis of Africa is either poverty porn or growth-boosting cheerleading. This is neither.

  

• To Dare Mighty Things: U.S. Defense Strategy Since the Revolution — Michael E. O’Hanlon (Yale University Press, Jan 13, 2026). O’Hanlon is a senior fellow at Brookings. This is 250 years of American defense strategy — not as celebration, but as analysis. If you want to understand why the US behaves the way it does when power shifts, you need this context.

  

• Bonfire of the Murdochs: How the Epic Fight to Control the Last Great Media Dynasty Broke a Family—and the World — Gabriel Sherman (Simon & Schuster, Feb 3, 2026) Not strictly geopolitics, but media infrastructure shapes geopolitics more than most analysts want to admit. Sherman tracks the Murdoch succession battle and its downstream effects on democratic institutions across three continents. If you think media ownership doesn’t matter for foreign policy, you haven’t been paying attention.

  

• Data Empire: A Human History of Records and Rule — Roopika Risam (Harper, Jul 14, 2026) Data has been the key lever of political control for 11,000 years, and Risam traces the full arc from ancient record-keeping to modern surveillance states. This is the deep-history companion to Siegel’s book — different timescale, same uncomfortable conclusion.

  

  Thanks!

Hello Readers,

Quick update on what’s happening here.

When I started Asia Communique six years ago, the goal was to build a serious, sourced voice on Asian geopolitics — no spin, no hot takes. That hasn’t changed.

But I’ve kept almost everything free, and that was a mistake. The readers who actually get real value from this — the deep analysis, the monthly forecasting, the source-level breakdowns — deserve a dedicated paid tier. The current free-heavy model doesn’t serve anyone: free readers get a product they aren’t invested in, and the signal of what this is actually worth gets lost.

Here’s what changes starting April 6:

What stays free: Breaking commentary, weekly summary digests, and one flagship analysis piece per month. You can still read the publication regularly at no cost.

What moves to paid ($10/mo):

If you’re already a paid member. All existing paying members get the same paid version at the existing cost. Those who subscribe before April 6th will also keep the existing $6 price.

I'm not going anywhere either way. The free tier stays real, and the paid tier becomes a product worth paying for.

— Aadil

India and China host two of the world’s largest think-tank ecosystems, both in absolute numbers and in regional influence. Yet the relationship between these institutions and the state differs sharply, shaping how reliable their analysis is when government interests are at stake. This newsletter-style report proposes a simple framework focused on formal affiliation, funding sources, and elite circulation to rate the reliability of leading Indian and Chinese think tanks as sources for independent insight.

Rather than ranking all institutions, the report spotlights a curated set of high‑visibility foreign policy and public-policy think tanks in each country. It groups them into three broad reliability bands—”Relatively Independent”, “State‑Adjacent/Hybrid”, and “State‑Embedded”—and explains what that means in practice for journalists, policymakers, and analysts engaging with their work or events.

Note: I am not affiliated with any of these think tanks. The guide is to help media outlets and researchers.

Methodology and Caveats

Read more

One year after President Trump unveiled his “Liberation Day” tariffs from the Rose Garden, a new and uncomfortable reality is crystallizing for Washington. The world has been taking notes — and taking action. From the Persian Gulf to rare-earth processing plants in China, rival nations are no longer simply absorbing American economic pressure. They are redirecting it.

The Strait That’s Shaking the Global Economy

The Strait of Hormuz is a narrow waterway, but the numbers it carries are enormous. About 20% of the world’s oil and gas passes through it daily. Since late February, when the United States and Israel began military operations against Iran, it has been effectively closed.

The economic fallout has been swift. Analysts at Evercore ISI downgraded U.S. GDP growth projections for 2026 from 2.8% to 2.2%, with a corresponding uptick in core inflation. Fuel surcharges are trickling into food distribution. Shipping rates for imported goods have jumped sharply. And with midterm elections on the horizon, the political pain is intensifying alongside the economic pressure.

In a Wednesday night address, Trump framed the situation coolly, noting that the United States receives “almost no oil” through the strait and suggesting that other dependent nations should lead efforts to protect it. Markets disagreed with his calm: oil prices surged and stocks fell the next morning.

The deeper point here is hard to ignore. Iran accounts for less than 1% of global economic output. Yet its geographic position gives it leverage wildly disproportionate to its size. This is precisely the kind of asymmetric power that Trump’s own playbook was supposed to exploit — and now it is being used against him.

China’s Quiet, Methodical Squeeze

Beijing has been playing an even longer game. China controls the processing of the vast majority of the world’s rare-earth minerals, the materials that go into semiconductors, fighter jets, MRI machines, electric vehicles and AI data centers. Since Liberation Day last April, it has been systematically building out a licensing regime for rare-earth exports, quietly cutting off companies in the U.S. defense supply chain while placing others under case-by-case review.

The effects are becoming visible. Medtronic CEO Geoff Martha acknowledged this week that China’s controls are hitting manufacturers of MRI and CT imaging machines. Defense contractors are scrambling for alternative sourcing with limited success. Former Commerce Secretary Gina Raimondo, who says she saw all of this coming, warned at a Council on Foreign Relations event that the AI data center supply chain carries a similarly alarming level of Chinese dependency that most Americans have not yet reckoned with.

Trump’s decision to delay a planned visit to China until mid-May added to the anxiety among executives who had been hoping a summit with Xi Jinping could unlock licenses and ease the squeeze.

The Playbook Is Spreading

Edward Fishman, author of Chokepoints: American Power in the Age of Economic Warfare, frames the moment clearly. “The lesson is that the way to deal with American economic coercion is to fight back,” he said. “Iran now is proving that again.” European officials, rattled by Trump’s January rhetoric about seizing Greenland, have also been quietly mapping potential leverage points in U.S. trade relationships. The playbook Iran and China are running is becoming required reading in capitals around the world.

Chokepoints by Fishman looks like a great read that I might pick up soon.

What makes this historically significant is the inversion of America’s own doctrine. The United States built the architecture of economic warfare, from weaponizing the global banking system to choking off semiconductor technology. Rivals with strategic geography or resource dominance are now deploying the same logic back at Washington. Iran holds a waterway. China holds a periodic table. Together, they are demonstrating that even the world’s largest economy has pressure points that cannot be neutralized by tariffs or military force alone.

Trump’s core thesis — that American power, properly leveraged, produces only upside — is being stress-tested in real time. The midterm clock is ticking, and the manufacturing renaissance his tariffs were meant to spark is being quietly hollowed out by the very supply chain dependencies he never fully accounted for.

Taiwan’s Defense Budget Is Frozen. Beijing Could Not Have Written It Better.

The Hormuz closure and China’s rare-earth squeeze share a common thread: smaller or more disciplined actors exploiting structural vulnerabilities in American power. But this week brought a reminder that vulnerability is not always imposed from outside. Sometimes, a country creates its own.

Taiwan is in the middle of doing exactly that.

A Record Budget, Going Nowhere

President Lai Ching-te’s administration put forward a genuinely historic defense budget for 2026 — T$949.5 billion, a 22.9% increase over last year and equivalent to 3.32% of GDP. That figure crosses the 3% threshold for the first time since 2009 and represents a direct response to relentless Chinese military pressure, including large-scale war games simulating a blockade. Washington backed the increase publicly and enthusiastically.

The opposition-controlled legislature has stalled it. Lawmakers say they support higher defense spending in principle but will not sign “blank cheques.” A separate proposal for $40 billion in additional special defense spending is frozen as well. The practical consequence, confirmed Thursday by defense ministry budgeting chief Yen Ming-teh, is that the ministry cannot execute 21% of this year’s budget on the original schedule. That translates to T$78 billion, or about $2.44 billion, sitting idle.

What Cannot Wait

The programs caught in the delay are not abstractions. HIMARS rocket artillery systems, Javelin anti-tank missiles and follow-on pilot training for Lockheed Martin F-16 fighter jets are all affected. These are not legacy procurement items. They are precisely the capabilities Taiwan has identified as essential for a credible defense against a Chinese invasion or blockade scenario.

Yen put it simply at Thursday’s press conference: “Any delay in timing will cause irreversible negative effects.” In procurement terms, that means missed delivery windows, lapsed training cycles, and gaps in readiness that take years to close even after funding is restored.

Taiwan Is Watching, and Learning

There is an striking contrast buried in the same briefing. Even as funding stalls, Taiwan’s military is moving forward intellectually. The island’s annual Han Kuang drills begin April 11, and this year’s table-top exercises will draw directly on two recent conflicts: U.S. and Israeli operations against Iran, and the U.S. military raid that seized Venezuelan President Nicolás Maduro in January.

Joint operations planning chief Tung Chi-hsing said Taiwan is extracting specific lessons: how to execute early warning and immediate response, how to counter drone swarms, how to build and maintain layered air defenses, and how to run anti-infiltration operations. The Iran war in particular — which opened with coordinated strikes designed to degrade air defense and command infrastructure — maps closely onto the scenarios Taiwan has always war-gamed against China.

The one major emerging question from the Iran conflict is whether Taiwan will be able to keep the international waterways open during the conflict. The Middle East conflict has also taught us that Beijing will heavily rely on drones and other autonomous systems during a conflict with Taiwan. This essentially makes it difficult for the shipping lanes to operate as normal.

The Danger in Plain Sight

Taiwan’s predicament captures a tension that democracies navigating great-power competition face everywhere: the machinery of democratic politics can slow the very decisions that security demands be made quickly. Beijing does not operate under that constraint. Its military planning is not subject to opposition budget holds or legislative brinkmanship.

This is not an argument against democratic accountability. But it is a reminder that in the current environment, delay carries real cost. As the Hormuz closure demonstrates, the actors putting pressure on American power have one thing in common: they move with purpose and they move fast. Taiwan’s parliament would do well to notice.

Thanks!

China is watching the U.S.–Israeli campaign in Iran enter a decisive phase as Donald Trump’s ultimatum to “obliterate” Iranian power plants nears its deadline, while Beijing’s own message remains steady: stop the strikes, keep Hormuz open, and avoid a broader regional meltdown. Across Asia, markets and policymakers are now treating the Iran conflict as a central security and economic risk rather than a distant war.

Beijing’s latest line: condemn, de‑escalate, don’t choose sides

China has not issued a radically new policy statement in the last 24 hours, but its previous positions now sit under the shadow of Trump’s 48‑hour ultimatum. Foreign Ministry spokespeople have consistently framed the U.S.–Israeli strikes as lacking UN authorization and therefore as violations of international law, stressing that the killing of Iranian leaders and attacks on civilian targets are “by no means acceptable.”

The core message has three recurring elements: an immediate stop to military operations; opposition to “regime change” and other interventions that trample sovereignty; and support for resolving the crisis through dialogue, with China ready to “work with the international community” to restore peace. Even as Iran threatens to hit power and water infrastructure across the Gulf if its own grid is attacked, Beijing publicly avoids endorsing Tehran’s retaliatory threats, instead warning all sides against plunging the region into chaos.

State media in the last news cycle: Hormuz, energy shock, and “Day 23” of war

In the past 24 hours, Chinese state media coverage has focused on two themes: the looming showdown over the Strait of Hormuz and the risk of a global energy crunch. Xinhua’s latest “daily brief” on the U.S.–Israeli strikes, published early Monday Beijing time, highlights Trump’s explicit threat to hit Iranian power plants unless Tehran fully reopens the strait within 48 hours and Iran’s counter‑warning that any such attack would make power plants in countries hosting U.S. bases “legitimate targets.”

The same brief and Xinhua’s world digest underline how nearly a month of airstrikes and missile exchanges has devastated infrastructure in Iran and Lebanon and pushed global oil prices up by more than 50 percent, with energy markets bracing for a prolonged crisis. Beijing’s media framing is clear: the conflict is now less about battlefield gains and more about whether a miscalculation over Hormuz and energy infrastructure tips the world into its worst energy shock in decades.

How analysts read China’s posture

Recent expert commentary argues that China is playing a long, careful game over Iran: rhetorically tough on U.S. “hegemony,” but cautious about being trapped by Tehran’s brinkmanship. Beijing has condemned the strikes and demanded respect for Iran’s sovereignty, yet has offered no military backing and has signaled it does not support Iranian attacks on Gulf Arab targets.

Analysts point out that China’s real priorities are protecting sea lanes and energy supplies, preserving ties with Gulf monarchies, and keeping space for diplomacy with Washington—even as it criticizes Trump’s use of force. This “concerned onlooker” posture means that, as the ultimatum clock runs down, China is urging restraint from the sidelines rather than positioning itself as a security guarantor in the Gulf.

Chinese social media: from armchair generals to anxiety over markets

On Chinese social media, the Iran war has again surged to the forefront as users track Trump’s ultimatum and market turmoil across Asia. Earlier deep dives into Weibo and other platforms show how news of the initial strikes, the killing of Iran’s supreme leader, and the death of a Chinese citizen in Tehran generated billions of views across official and user‑generated hashtags, a pattern that is now being repeated around the Hormuz standoff.​

Netizen reactions span several strands. Nationalist voices rail against U.S. “hegemonism” and express sympathy for Iran, while others praise Iranians “seeing the end of a corrupt regime” or discuss women’s rights and theocratic rule in Iran, revealing clear divergence from Beijing’s purely sovereignty‑focused narrative. At the more technocratic end, military and tech bloggers are debating the performance of Iranian air defenses, including Chinese‑supplied radar, and whether recent failures expose weaknesses in Chinese systems—sparking pushback from “Little Pink” loyalists who insist that individual missile penetrations do not prove system failure.

New angle: markets, not missiles, dominate Chinese conversations today

With the ultimatum’s deadline approaching, much of today’s Chinese‑language commentary has shifted from frontline footage to financial risk. Business media and market‑watching social accounts are circulating charts showing Asian indexes tumbling more than 5 percent in Tokyo and Seoul, with Hong Kong and mainland‑linked markets also sharply lower as traders price in the possibility of U.S. strikes on Iran’s power grid and Iranian retaliation against Gulf energy and desalination facilities.​

In India, derivatives analysts report that options pricing around Tuesday’s Nifty expiry implies far larger‑than‑usual moves, with implied volatility spiking to near two‑year highs as investors hedge against an Iran‑driven shock. Chinese‑focused programs on international business channels are telling audiences to expect further swings in equities, bonds, and energy as the ultimatum window closes, reinforcing for Chinese viewers that the Iran war is now an immediate pocketbook issue, not a distant geopolitical drama.​

Asia Defense and Security – Last 24 Hours

Hormuz, Gulf infrastructure and Asian exposure

Iran’s leadership has spent the last day signalling that any U.S. strike on its electrical grid will be met with attacks on power and water facilities across the Gulf, explicitly including desalination plants that millions rely on for drinking water. That prospect, paired with a near‑total shutdown of Hormuz to non‑Chinese and non‑regional shipping, is pushing Asian governments to dust off contingency plans for supply diversification and to brace for further oil and LNG price spikes.

Asian energy and shipping companies are quietly rerouting cargoes and reassessing insurance coverage for Gulf routes, while some Chinese and Indian‑flagged vessels continue to transit under heightened risk, underscoring their countries’ appetite for discounted crude despite the security environment.

Asian markets and security planners react

Across East and South Asia, the Iran war is now driving both market moves and strategic conversations.

• Major stock benchmarks in Japan and South Korea fell more than 5 percent on Monday as investors weighed the risk that Trump will follow through on his threats and that Iran will in turn strike regional infrastructure, turning a regional war into a systemic energy crisis.

• In India, the spike in implied volatility and the slide in the Nifty underline how the Iran conflict has become the principal macro‑security risk for local markets, crowding out domestic narratives.​

• Security planners in U.S. partner states from Japan to the Gulf are reviewing force‑protection measures and energy contingency plans, anticipating possible missile and drone campaigns against civilian infrastructure if the ultimatum is enforced.

Global security alerts and Middle Eastern spillover

The past 24 hours have also seen fresh security alerts and intercept activity tied to the conflict. The U.S. State Department has renewed a worldwide caution for its citizens, citing the elevated threat to diplomatic facilities, transport hubs and public gatherings as Iran and allied groups threaten retaliation beyond the immediate war zone.

In the Gulf, air defenses have reportedly intercepted waves of drones and missiles aimed at energy and desalination sites, underlining how quickly the war has expanded from Iran’s territory into the wider regional infrastructure network. For Asian importers and navies that depend on those routes, the message is stark: what began as a U.S.–Israeli air campaign in Iran is now a multi‑domain contest over chokepoints and critical infrastructure that ties the Middle East directly to Asian energy and economic security.

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The 2026 Iran war is not a distant Middle Eastern crisis for Asia; it is a live stress test of the region’s energy security, alliance structures, and ongoing arms buildup.
Disruption in and around the Strait of Hormuz—through which roughly one‑fifth of global oil and a similar share of liquefied natural gas (LNG) normally transit—has already snarled shipments to key Asian buyers and driven up transport and crude costs.
At the same time, the conflict is forcing U.S. allies and partners in East Asia to reassess how much they can rely on U.S. military bandwidth when around 40% of U.S. naval assets are reportedly tied down in the Middle East and the only carrier in Asia is in maintenance.

This edition argues that the Iran war will accelerate three trends that were already reshaping Asia’s security landscape: a structural push to harden energy supply chains, a surge in regional defense spending and arms racing, and a more opportunistic China positioning itself as both an energy customer and alternative diplomatic pole.
Together, these trends tighten the feedback loop between West Asian crises and Indo‑Pacific deterrence, raising medium‑term escalation and miscalculation risks even if no Asian military is directly involved in the fighting.

Energy shock as Asia’s immediate vulnerability

Asia is the world’s largest oil‑consuming region and still deeply dependent on Middle Eastern suppliers for roughly 60% of its crude imports, leaving it acutely exposed when shipping in and out of the Gulf is disrupted.
The current conflict has seen tankers bottled up inside the Gulf and insurers hike war‑risk premiums, pushing up both crude prices and freight costs for refiners across the region.​

For China and India—the first and third largest crude importers globally—the stakes are obvious.
China is the top buyer of Iranian oil, importing around 1 million barrels per day from Iran in 2025, accounting for roughly 13% of its seaborne imports; that flow is now jeopardized by the fighting and sanctions‑driven shipping and insurance complications.​
India has leaned heavily on Gulf suppliers for crude and relies on the region for about 91% of its liquefied petroleum gas (LPG) imports, a dependence that New Delhi’s own analysts now flag as a strategic liability in wartime.​

Governments across East Asia are discovering that strategic stockpiles buy time but not immunity.

Japan imported about 2.34 million barrels of crude per day in January 2026, roughly 95% of which came from the Middle East, and it remains one of the world’s top LNG importers; Tokyo has so far resisted tapping its large strategic reserves, but officials acknowledge that prolonged disruption at Hormuz would quickly tighten the market.
South Korea and Taiwan, which also source roughly half or more of their energy from the Middle East, have activated contingency plans and emphasized that current stockpiles cover only weeks to a few months of demand.

Southeast Asian states, though somewhat less import‑dependent on the Gulf, are hardly insulated.
Thailand, for example, has temporarily suspended petroleum exports to protect domestic reserves—officials say current stocks cover about 61 days—and is trying to boost gas production in the Gulf of Thailand, but analysts warn that its heavy reliance on spot‑market LNG leaves it highly exposed to price spikes and bidding wars with richer North Asian economies.​
Across the region, finance ministries are already warning that another extended oil shock on top of post‑pandemic inflation could dent growth, widen fiscal deficits, and amplify domestic political pressure over the cost of living.

From price shock to strategy shift

The war’s most durable impact is likely to be strategic rather than cyclical.
Indian policy reviews now frame the conflict as a wake‑up call on three fronts: the absence of strategic LPG reserves, the danger of concentrating import sources in one region, and the vulnerability of shipping lanes that pass through chokepoints like Hormuz.
Short‑term fixes—such as emergency powers to boost domestic LPG output, demand rationing, and ad hoc alternative supply deals—are being coupled with calls for medium‑term naval protocols to protect energy shipping and for diversification of suppliers beyond the Gulf.​

East Asian planners are drawing parallel lessons.
Energy‑intensive sectors like Taiwan’s semiconductor industry and South Korea’s petrochemicals and heavy manufacturing remain deeply exposed to fuel price volatility and physical disruption, making energy security a national‑security issue rather than a narrow economic concern.
Analysts across Japan, Korea, and Taiwan have argued that higher near‑term costs for accelerating renewables and nuclear restarts may be preferable to recurring vulnerability to distant conflicts, especially as fossil fuels still dominate their power mix—with renewables providing less than 10% of electricity in Korea and Taiwan and about 22% in Japan.​

In Southeast Asia, the sense of urgency is more uneven but palpable.
Energy agencies within ASEAN have warned that a prolonged closure or congestion of Hormuz could “severely hinder global economic activity,” with ASEAN’s Centre for Energy stressing that current disruptions are not just a temporary shock but a preview of structural fragility in Asian energy security.​
This reinforces, rather than replaces, the pre‑existing case for regional grid interconnection, diversification of fuel types, and investment in strategic reserves at the national and regional levels.

A parallel trend: record military spending

Even before the first missiles flew in the 2026 Iran conflict, Asian defense budgets were rising at their fastest pace in over a decade.
According to Stockholm International Peace Research Institute (SIPRI) data, global military spending hit a record 2.7 trillion U.S. dollars in 2024, with Asia–Oceania accounting for about 629 billion dollars, an increase of 6.3% from 2023 and the largest jump since 2009.
East Asia alone spent 433 billion dollars in 2024, up 7.8% year‑on‑year, reflecting what SIPRI describes as an unprecedented arms race driven largely by concerns over China.

China now accounts for roughly half of all military expenditure in Asia–Oceania.
Its 2024 defense budget is estimated at around 314 billion dollars, a 7% increase from 2023 and its largest annual rise since 2015, marking roughly three decades of uninterrupted growth aimed at modernizing all domains of the People’s Liberation Army by 2035.
Statista and other SIPRI‑based compilations suggest that Chinese military spending grew by more than 20% between 2020 and 2024, reaching approximately 320 billion dollars in constant 2023 prices.

Regional responses have been robust.
Japan has increased its defense spending by over 40% between 2020 and 2024, lifting its 2024 budget to roughly 55–58 billion dollars—about 1.4% of GDP and its highest level since the late 1950s—as it invests in long‑range strike capabilities and missile defenses against China and North Korea.
Taiwan has raised military spending by about 37% over the same five‑year period, sharpening its focus on asymmetric capabilities such as missiles, drones, and air‑defense systems.

India’s military expenditure has climbed by around 8% from 2020 to 2024 to reach roughly 84–86 billion dollars, keeping it among the world’s top five spenders even as it remains a major arms importer.

How the Iran war accelerates the arms race

The Iran war does not create these defense‑spending trends; it amplifies them and shifts their political justification.
Policymakers in Tokyo, Seoul, New Delhi, and Taipei can now point to a live demonstration of how quickly a distant crisis can tie down U.S. forces, jolt energy markets, and redefine risk calculations for middle powers.
In Japan, where the government has already framed its historic defense buildup as a response to a more hostile regional environment, the conflict is likely to strengthen arguments for further increases in spending and for loosening restrictions on arms exports and joint development.​

South Korean strategists are particularly focused on alliance credibility rather than on the Iran theater itself.
Analysts in Seoul warn that Washington’s demonstrated willingness to use force with limited prior consultation, and to reassign significant military assets away from the Indo‑Pacific to the Middle East, raises the risk that Korea could be dragged into conflicts beyond the peninsula or left more exposed if a crisis with North Korea or China erupted while U.S. forces are overstretched.​
That, in turn, feeds domestic debates over strengthening indigenous conventional and missile capabilities and, on the political fringes, over nuclear options, even if mainstream support for nuclearization remains low.

For India, the war intersects directly with its twin concerns about border threats and sea‑lane security.

New Delhi has long worried about the vulnerability of its energy imports to disruptions in West Asia; the present conflict validates arguments for faster naval modernization, greater maritime domain awareness in the Arabian Sea and Indian Ocean, and closer security coordination with partners such as France, the United States, and regional states like the UAE. As Indian defense spending edges upward and industrial policy pushes self‑reliance, the Iran war strengthens the case for investments in air and missile defense, anti‑submarine warfare, and escort capabilities for critical shipping, rather than just traditional land‑centric modernization.

U.S. bandwidth and allied anxiety

The war is also a real‑time test of Washington’s long‑stated “pivot” to the Indo‑Pacific.
Recent reporting suggests that about 40% of U.S. Navy ships are currently deployed to or supporting operations in the Middle East, and that the only U.S. aircraft carrier assigned to Asia is in maintenance, raising pointed questions in Tokyo, Seoul, and Taipei about how quickly credible U.S. naval power could surge in an East Asian contingency while a major operation against Iran is still underway.​
This apparent re‑prioritization contrasts with recent U.S. strategy documents that cast the Indo‑Pacific—and specifically the Taiwan Strait—as the central theater of strategic competition.

U.S. allies’ reactions are cautious but revealing.

Japanese leaders have expressed strong support for diplomatic efforts to halt Iran’s nuclear ambitions and de‑escalate the conflict but have conspicuously stopped short of endorsing the initial U.S.–Israeli strikes that triggered the broader war; legal and political constraints continue to limit any prospect of direct Japanese military involvement.​
South Korea openly worries that the Trump administration’s willingness to act unilaterally, coupled with the possibility of being drawn into secondary theaters, complicates its own deterrence and crisis planning on the peninsula.​

In Taiwan, lawmakers and analysts warn that prolonged U.S. distraction in the Middle East could embolden Beijing to step up military and grey‑zone pressure around the island, calculating that U.S. naval and air reinforcements would face competing demands and longer deployment timelines.

While no government in East Asia is publicly decoupling from the U.S. alliance network, the Iran war underscores the logic of what many have already been doing quietly: hedging by deepening intra‑Asian security ties, building more self‑reliant capabilities, and exploring limited security cooperation with European partners.

China’s balancing act and opportunity space

Beijing’s stake in the conflict is multidimensional.
China is a major energy customer for Iran and other Gulf producers, and it has portrayed itself for years as a neutral broker capable of mediating between Iran and Saudi Arabia, in contrast to what it depicts as U.S. militarization of the region.
At the same time, Chinese strategists are acutely aware that their core security interests lie in East Asia, not the Middle East, and that over‑commitment westward could undercut their ability to manage U.S. and allied pressure closer to home.​

The war nonetheless offers Beijing both risks and openings.
On the risk side, sustained disruption of Iranian and Gulf energy exports directly affects an economy that remains heavily import‑dependent for hydrocarbons despite rapid growth in renewables.
On the opportunity side, any perceived U.S. overextension or wavering commitment to Indo‑Pacific priorities allows China to frame itself to regional audiences as the steadier, geographically proximate power—particularly if it can maintain trade and investment flows while Washington is preoccupied. Chinese commentators also see the conflict as a live rehearsal of how economic warfare, sanctions, and maritime chokepoints might be used against China itself in a Taiwan or South China Sea crisis.
This reinforces Beijing’s ongoing efforts to diversify overland and maritime energy routes via projects linked to the Belt and Road Initiative, including pipelines and port access that reduce reliance on sea lanes passing through Hormuz and Malacca.​
In that sense, the Iran war is both a near‑term disruption and a data point feeding into longer‑term Chinese efforts to de‑risk its own external dependencies.

Strategic implications for Asian decision‑makers

Taken together, the Iran war and Asia’s existing security trends point toward a more militarized and less predictable Indo‑Pacific.

Energy supply chains are now plainly understood as a frontline vulnerability rather than a background economic variable, and governments are moving—unevenly but perceptibly—toward diversification of suppliers, expansion of strategic reserves, and tighter linkage between energy and naval strategy.

At the same time, the region’s defense‑spending trajectory shows no sign of leveling off; if anything, the conflict validates domestic arguments for larger budgets and more sophisticated capabilities across U.S. allies, partners, and competitors alike.

The war also complicates alliance management.

For U.S. allies, the lesson is not that Washington is abandoning Asia, but that its attention and assets are finite and can be pulled into simultaneous crises—sharpening incentives to invest in self‑defense, deepen minilateral cooperation, and, in some cases, keep lines of communication open with Beijing even as deterrence is strengthened.

For China, the conflict underscores both the leverage and vulnerability that come with being a top energy importer and a rising military power, pushing it to intensify diversification and hardening strategies.

Over the coming months, key signposts to watch will include: whether energy prices and shipping disruptions remain elevated or normalize; whether Japan and South Korea lock in additional multi‑year increases in defense spending beyond what is already planned; how India sequences its naval and air‑defense investments relative to land forces; and whether U.S. force posture in the Indo‑Pacific returns quickly to pre‑war baselines or remains strained by extended operations against Iran.

Those choices will determine whether the Iran war becomes remembered in Asia as a brief external shock—or as the moment when energy insecurity and great‑power distraction decisively accelerated the region’s slide into a more dangerous security environment.

This week, Intelligence Online reported that China’s Ministry of State Security (MSS) has ordered the “immediate withdrawal” of Chinese teams and interests from Afghanistan. Officially, Beijing is saying very little. Unofficially, its consular feeds on WeChat — and the way those alerts are blasted across Chinese news sites and onto Weibo — are doing the talking.

Put simply: if you’re Chinese and still in Afghanistan, the state is telling you to get out.

The secret order, and the public hints

According to Intelligence Online, the MSS has decided to pull back from Afghanistan for the long haul, not just ride out a bad few weeks. The key point in their piece is what this is not about: it’s not mainly a reaction to one or two incidents on the Tajik border. It’s about something deeper — a loss of confidence in Pakistan’s ability to protect Chinese interests across the whole Afghanistan–Pakistan–Central Asia arc.

For Beijing, that’s a big deal. For years the assumption was: Pakistan manages the Taliban problem, China brings the money and the engineers. If that stops working, the logic of keeping MSS teams and Chinese companies on the ground in Afghanistan starts to crumble.

Beijing isn’t going to hold a press conference to say “our bet failed.” Instead, we see the shift in the channels ordinary Chinese actually follow: consular WeChat accounts, embassy notices, and the big aggregators that repost them.

What WeChat is telling people

The clearest signal came on 23 January.

That day, the foreign ministry’s consular WeChat account “领事直通车” pushed out an alert saying Afghanistan’s security situation is “复杂严峻” — complex and severe — after a bombing in Kabul killed and injured Chinese nationals at a Chinese restaurant. The advice was unusually blunt: don’t travel to Afghanistan, and if you’re already there, “尽快撤离” — leave as soon as possible.finance.

Big portals like The Paper, Sina and Eastmoney all ran the text in full, with headlines along the lines of “中国公民尽快撤离！” (“Chinese citizens should leave as soon as possible!”), and flagged “领事直通车” as the source. Their Weibo accounts then pushed that same content into people’s feeds.

For a Chinese businessperson or worker in Kabul, you don’t need secret MSS cables to know what this means. When the official consular account tells you, in big red characters, to leave, that’s the closest thing you’ll get to an evacuation order.

Before that: “get out of the borderlands”

If you scroll back a bit, you can see how the message escalated.

On 7 January, the Chinese embassy in Kabul put out a notice focusing on the Afghan–Tajik border region. The language was already strong: it “again urged” Chinese companies and citizens in those areas to “promptly and in an orderly manner withdraw,” citing repeated cross‑border attacks in late 2025 that killed and injured Chinese workers at mining and infrastructure sites inside Tajikistan.

The embassy warned that further attacks on Chinese enterprises and staff could not be ruled out, and it published emergency contact numbers for local police and consular hotlines. That text was then mirrored on other official and semi‑official Chinese sites — local foreign‑affairs offices, overseas Chinese networks, etc. — so it didn’t just live on one embassy webpage.

Two weeks later, the focus broadened from “border areas” to “Afghanistan, full stop.” The January 7 border warning plus the January 23 WeChat blast together map a clear trajectory: first, get out of the frontier; then, if you can, get out of the country.

Beijing pulls people back – and builds fences further out

Here’s the twist: even as Beijing tells its citizens to leave dangerous stretches of the Afghan–Tajik frontier, it is quietly hardening that same frontier from the other side.

Earlier this month, Tajikistan’s lower house of parliament approved an agreement for China to finance and build nine new border infrastructure facilities along the Tajik–Afghan border. The project will cover roughly 17,000 square metres and cost about 424.8 million yuan, provided entirely by Beijing as a grant. According to Tajik security officials, the sites will include buildings equipped with modern surveillance systems, communications gear, and engineering infrastructure to strengthen the material and technical base of Tajikistan’s border troops.

This is not a one‑off. Tajik officials say that under a previous agreement with Beijing, 12 similar border facilities were built between 2017 and 2018 in other stretches of the Tajik–Afghan frontier. In other words, while China is drawing down its exposure inside Afghanistan, it is doubling down on border security just beyond it — paying to upgrade Tajik outposts that, in practice, help keep Afghan instability and militant flows at arm’s length.

The Kabul restaurant bombing: a turning point

The spark for that WeChat alert was the 19 January attack on the “China Lanzhou Beef Noodles” restaurant in central Kabul.

A suicide bomber walked into one of the few obviously Chinese venues still operating in the city’s commercial district and detonated. At least seven people were killed, including one Chinese citizen; around a dozen were wounded, among them five Chinese nationals. ISKP claimed responsibility and made a point of saying it was targeting Chinese nationals, linking the attack directly to Beijing’s policies in Xinjiang.

For Chinese officials, this hit uncomfortably close to the scenario they’ve worried about since 2021: the Taliban promising to protect Chinese projects, and then failing to stop jihadist groups from striking them. When you can’t even keep a small restaurant safe, it becomes very hard to sell Kabul as a plausible destination for large‑scale investment.

Violence doesn’t stop at Afghanistan’s borders

This isn’t just about what happens inside Afghanistan.

In late November 2025, militants operating from Afghan territory crossed into Tajikistan and attacked Chinese‑linked mining and infrastructure sites. At least five Chinese workers were killed and several more were injured in a series of incidents that included a drone dropping grenades on a mining compound.

Tajik and Chinese sources both made it clear that Chinese projects and personnel were deliberate targets, not collateral damage. Chinese embassies in the region responded with tough language and calls for urgent evacuation from affected border areas, which then fed directly into the January 7 embassy notice out of Kabul.

From Beijing’s point of view, this confirms the nightmare scenario: Afghanistan as a launchpad for attacks on Chinese projects in neighboring states as well as inside Afghanistan itself.

The new nine‑post project in Tajikistan is best read against that backdrop: if you cannot stop violence on Afghan soil, you at least try to control who and what crosses out of it.

Pakistan vs. Taliban: China’s gatekeeper is on fire

Layered on top of all this is the sudden slide toward open conflict between Pakistan and the Taliban authorities.

On 27 February, Pakistan launched airstrikes on targets inside Afghanistan, and the Taliban responded with cross‑border attacks. Pakistan’s defense minister used the phrase “open war” to describe what was happening. Chinese and international coverage has treated this as a serious escalation, not just another round of sporadic shelling.

Chinese analysts warn that if fighting along the Durand Line continues, it will threaten Chinese citizens in both countries and put pressure on key pieces of the China–Pakistan Economic Corridor. In other words, the partner Beijing hoped would manage Afghanistan risk — Pakistan — is now part of the risk.

When foreign ministry spokesperson Mao Ning was asked directly on 27 February whether China was considering evacuations from Pakistan and Afghanistan or suspending flights, she stuck to the cautious script: China is closely watching the situation and will provide “necessary assistance” to its citizens. Read together with the WeChat blasts, though, the direction of travel is obvious.

How Chinese media now talk about Afghanistan

Chinese‑language coverage and commentary after the Kabul bombing has shifted tone.

Instead of talking up opportunity and reconstruction, analysts now emphasize that Beijing is “re‑evaluating” its relationship with Afghanistan, and that security is the first and non‑negotiable condition for any serious economic engagement. Reports point out that while Chinese companies have signed big MoUs in mining, most of the supposed multi‑billion‑dollar projects are still stuck on paper.

Beijing accepted the envoy sent by the Taliban but has still not formally recognized the Taliban government, in contrast with Russia. Experts quoted in Chinese outlets argue that if Afghanistan were truly a core strategic partner, recognition would probably have come already; the hesitation is itself a signal.

The emerging picture: Afghanistan is being treated as a security headache to be managed at arm’s length, not as the next big Belt and Road prize — and China would rather pay to reinforce a frontier in Tajikistan than sink serious capital into Afghan soil itself.

Reading policy through social feeds

All of this is why watching WeChat and Weibo is so useful here.

On foreign‑policy issues, Chinese social media is not a free‑for‑all. It’s a curated space where official accounts set the tone. When “领事直通车” and the Kabul embassy repeatedly tell Chinese citizens “暂勿前往阿富汗，在当地中国公民尽快撤离” — don’t go, leave if you’re there — and that language is mirrored across multiple government and quasi‑government websites, it’s safe to say you’re looking at more than just routine travel advice.

The wording is strikingly consistent: “尽快撤离,” “有序撤离,” and “复杂严峻.” It appears on embassy sites, on central government pages, on local foreign‑affairs portals, and then gets repackaged by media outlets with large Weibo footprints. That kind of repetition usually means the center has decided on a line, and everyone is following it.

In that light, the Intelligence Online story about an MSS‑ordered withdrawal doesn’t come out of nowhere. It clicks into place alongside what Chinese citizens are being quietly told on their phones — and with where Beijing is now choosing to spend money: on fences and border posts in Tajikistan, not on new projects in Afghanistan.

Where this leaves Beijing

If the MSS is indeed drawing down in Afghanistan, China’s already cautious economic push there is likely to slow even further. Security services are the backbone for any serious overseas project in a place like Afghanistan; if they are stepping back, it’s a strong signal to everyone else to do the same.

For Pakistan, this is an uncomfortable moment. The country that marketed itself as China’s “iron brother” and security gatekeeper to the West is now locked in a shooting match with the Taliban and struggling to protect Chinese assets at home and next door. That doesn’t mean Beijing will walk away from CPEC, but it does mean the bar for new risk in the region just got higher.

And for Afghanistan, it is another reminder that foreign powers might talk about long‑term commitments, but they all have exit plans. Right now, if you want to know how close China is to the door, you don’t look at speeches. You look at WeChat — and at the new Chinese‑funded border posts going up on the other side of the mountains.

Thank you!

I wrote a new op-ed for Taipei Times about what China is thinking about the U.S.-Iran conflict. The conflict is stress testing the sanctions evasion regime Beijing built alongside Tehran: the shadow fleets to carry oil, the missile trade and other related materials.

The op-ed: Beijing has a three-body problem

Now the newsletter follows

Washington and Beijing are busily talking about “stability” even as Asia’s strategic environment feels anything but stable. On one front, Donald Trump is heading to Beijing for a summit that’s supposed to calm U.S.–China tensions without really fixing anything. On another, the war with Iran has effectively choked off the Strait of Hormuz, triggering an energy shock that lands hardest in Asian capitals. Layer on China’s drills in the South China Sea, North Korean missile tests and Japan’s record defense budget, and you get a region that’s quietly preparing for a much rougher decade.

Let’s start in Beijing.

Trump–Xi: a summit about “not blowing things up”

Trump is currently slated to visit China from March 31 to April 2 — his first state visit to Beijing since 2017, and the first meeting with Xi Jinping since the two sides agreed on their latest trade truce last October. The official line from both capitals is that they want to “maintain stability” after years of tariffs, tech controls and bruising political rhetoric. But people involved in the planning are remarkably blunt: no one expects a real reset in business or investment ties.

On the U.S. side, corporate America hasn’t yet secured the big CEO delegation it hoped would hitch a ride on Air Force One, despite lobbying from Trump’s ambassador in Beijing, David Perdue. Trade officials in Washington are wary of turning the trip into a glitzy deal-signing jamboree; the Office of the U.S. Trade Representative wants to keep the focus on tightly managed purchase commitments, not a broader reopening that would be hard to walk back later.

Beijing, meanwhile, sees little sign that Washington is ready to offer the investment protections Chinese firms want after episodes like the forced restructuring of TikTok’s U.S. business. Chinese officials are also irritated by what they view as last-minute U.S. planning for a visit that, in the Chinese system, is usually scripted months in advance. As Brookings’ Ryan Hass put it, the ambition for the trip “seems to be getting smaller by the day” — which may be the point.

Even on tariffs, the best case is muddling through. The U.S. Supreme Court recently struck down a 10% tariff Trump had imposed on fentanyl-related imports under an emergency statute, and the administration is already signaling it will simply re-impose the same levy under a different law. Trade Representative Jamieson Greer insists the meeting “is not to fight about trade,” but rather to check that China is living up to existing purchase pledges and keeping rare earths flowing. That’s not a reset; that’s crisis management.

Rare earths and Boeings: commerce as leverage

Underneath the summit optics sit two very concrete bargaining chips: rare earths and airplanes.

First, rare earths. U.S. aerospace and chip suppliers are already grappling with tightening supplies of key elements such as yttrium and scandium, even after Beijing eased some of the export curbs it imposed last year. These materials are buried inside jet engine coatings, missiles and high-end semiconductors — precisely the sectors Washington labels “strategic.” Industry sources say some coating manufacturers have paused operations or turned away smaller customers because they simply cannot secure enough feedstock, even as prices spike. Officials publicly insist there’s no crisis, but privately concede that shortages are real.

That brings us to Boeing. Multiple reports suggest Boeing is close to sealing a blockbuster order for around 500 narrow-body jets, plus potential widebodies, to be wrapped in the aura of the Trump–Xi summit. The deal would help restart big Chinese orders after years of freeze and keep Chinese airlines tied into Boeing’s ecosystem well into the 2030s, given current production backlogs. Beijing, unsurprisingly, wants something in return: multi-year guarantees on parts and support, and perhaps relief from some export-control threats.

White House aides are reportedly split on whether to unveil everything in Beijing or hold some “wins” back for a future summit on U.S. soil. In other words, even commercial deals are now rationed and sequenced as geopolitical tools.

South China Sea: “routine drills” that aren’t routine

While officials talk up “stability,” the maritime picture is tense.

At the end of January, China’s Southern Theater Command launched naval and air “combat readiness” drills around Scarborough Shoal, a disputed reef in the South China Sea claimed by both Beijing and Manila. State-linked outlets highlighted the presence of H-6K bombers armed with anti-ship missiles and a Type 055 destroyer — a clear signal that this was more than a symbolic sail-by. Chinese statements framed the drills as a response to “provocations” by unnamed countries and part of efforts to “resolutely safeguard” sovereignty and maritime rights.

All this comes on the heels of repeated U.S.–Philippines exercises in nearby waters and a flurry of multinational drills involving the U.S., Japan, France and others. The emerging pattern: overlapping exercises, increasingly capable platforms on both sides and rising risk that one dangerous maneuver or collision creates the next crisis.

North Korea: missiles as punctuation marks

Further north, Pyongyang is once again using missile launches to punctuate regional diplomacy.

On January 3–4, North Korea fired several ballistic missiles into the sea off its east coast, with South Korea and Japan estimating ranges of around 900 km. The timing was deliberate, coinciding with South Korean President Lee Jae-myung’s state visit to China, where North Korea’s nuclear and missile programs were on the agenda.

Later in the month, North Korea followed up with additional suspected ballistic missile tests as it prepares for a rare ruling-party gathering. State media has presented these launches as part of efforts to expand and modernize the country’s “nuclear deterrent” amid what Kim Jong Un calls a worsening “geopolitical crisis.” For Beijing, they are an unwelcome reminder that it either cannot or will not rein in its neighbor. For U.S., Japanese and South Korean planners, they’re yet another argument for more missile defense, more exercises and deeper trilateral coordination.

Japan’s defense build-up becomes the new normal

Against this backdrop, Japan’s quiet but relentless military build-up is hard to ignore.

Tokyo has approved a record draft defense budget of more than 9 trillion yen (about 58 billion dollars) for fiscal 2026, continuing a multi-year push to reach roughly 2% of GDP in defense spending. Officials explicitly justify the increase as a response to China’s growing military power, North Korean missiles and Russia’s more active posture in the region.

The money is flowing into more than just big-ticket ships and jets. Tokyo is funding a multi-layered coastal “Shield” made up of thousands of drones and other unmanned systems to complicate any amphibious or gray-zone incursions, aiming for full deployment by the end of fiscal 2027. It is also investing heavily in a next-generation fighter program with the UK and Italy, along with AI-enabled “loyal wingman” drones, longer-range cruise missiles and looser export rules. Put together, this is a shift from self-defense minimalism to something much more forward-leaning.

If the Strait of Hormuz really closes

All of that, though, is happening as the world’s most important energy chokepoint — the Strait of Hormuz — becomes functionally unpassable for many tankers. The Iran war has turned what was once a recurrent scare story into a live disruption.

On a normal day, about 19–21 million barrels of oil and petroleum liquids move through Hormuz, roughly one-fifth of global consumption and more than a quarter of all seaborne oil trade. The strait is also a key artery for LNG, with about 20% of global volumes — dominated by Qatar — squeezing through its narrow waters. The U.S. Energy Information Administration and other trackers estimate that more than 80% of the crude and over 80% of the LNG passing Hormuz head to Asia, with China, India, Japan and South Korea together taking roughly 70% of the oil.

That exposure is now being priced in brutally. Since the effective closure of the strait, Brent and WTI have logged their sharpest weekly gains in years, and global benchmark gas prices have jumped as much as 40–50% in a single session, particularly as Qatar shutters production at major LNG facilities. Analysts are sketching scenarios in which oil spikes toward 130–150 dollars a barrel if the disruption persists, while some Gulf officials talk up even higher worst-case numbers.

For Asia’s big economies, the math is harsh. Japan still sources roughly 80–95% of its crude from the Middle East, most of it transiting Hormuz, and depends on fossil fuels for nearly 90% of its total energy use. China gets around half of its oil imports and about a third of its LNG from the Gulf, while India’s Middle East share runs in the 40–50% range; South Korea and smaller Southeast Asian states are similarly exposed. Strategic stockpiles buy time — Japan and South Korea have more than 200 days of cover, China perhaps three to four months, India around two months — but not an indefinite blockade.

There are workarounds, but none at the same scale. Some Saudi and Emirati crude can be pumped to Red Sea ports via pipelines, and Asian buyers can lean harder on Russian, U.S. and West African barrels. Yet a multi-million-barrel-per-day gap remains, especially for LNG, which simply cannot be rerouted around Hormuz the way some oil can. The result: tankers idling in the Gulf, war-risk insurance spiking, cargo diversions via longer and costlier routes, and major lines suspending bookings to key Middle Eastern ports except for essential goods.

Militarily, a choked Hormuz pulls Asian security forces deeper into Gulf waters. Gulf states are leaning on the U.S. Fifth Fleet and European navies for escorts, but Japan and South Korea — which have deployed assets to protect shipping before — will face pressure to step up again. China, whose tankers are among the biggest users of the strait, finds itself in the awkward position of relying on a waterway patrolled by U.S. forces even as it competes with Washington globally. For developing importers like Pakistan, Bangladesh and Thailand, the problem is even starker: they risk being outbid for cargoes altogether as richer economies hoard supplies.

In short, a sustained shutdown of Hormuz wouldn’t just be another oil price spike. It would be a structural shock that tests Asia’s energy-security strategies, accelerates diversification away from Gulf hydrocarbons where possible and hardens the case for bigger navies and more forward-deployed forces. The paradox is that as Asian capitals talk about “de-risking” their relations with the West, their most immediate risk still runs through a narrow channel between Iran and Oman.

What we’re watching next

A few storylines to track in the coming days:

• Whether the Trump–Xi summit produces anything more than a Boeing mega-order, some farm purchases and vague stability language — and, just as important, what gets left out.

• How explicitly Beijing links rare earths and other critical minerals to U.S. behavior on tariffs, export controls and Iran-related sanctions.

• The tempo and intensity of Chinese and U.S.–allied drills in the South China Sea, especially around Scarborough Shoal.

• Further North Korean tests as its party meeting approaches, particularly any new hypersonic or solid-fuel systems that compress warning times.

• How quickly Japan and other Asian states move from energy shock management (stockpile releases, subsidies) to deeper structural shifts in defense and energy policy.

Everyone is talking about “stability” right now. But if you look at the drills, the budgets and the tankers stuck in the Gulf, Asia’s real story this week is nervous preparation for the next shock.

Countries in Asia are increasing their weapon purchases due to the perceived threat posed by China’s intentions:

https://x.com/NikkeiAsia/status/2030876641673548089

Thank you for reading!

Though I am not working as a journalist anymore, I will still continue to bring you the Asia Communique newsletter when possible.

Lead story: China’s cyber “shooting range” for its neighbors

The Record reports that leaked technical documents from a Chinese government-linked project show Beijing rehearsing cyberattacks against the critical infrastructure of neighboring countries on a secret training platform. The system appears to sit within a broader ecosystem of Chinese “cyber ranges” developed with private contractors for the Ministry of Public Security (MPS), designed to let operators practice full-spectrum offensive operations in controlled but realistic environments.

Follow‑on analysis of the same leak identifies the core platform as “Expedition Cloud”, a large-scale cyber range built by Nanjing Saining Network Technologies (also known as Cyberpeace) for MPS. Technical documentation describes a distributed range that mirrors real‑world foreign networks, allowing Chinese operators to rehearse intrusions against replicas of:

• power grids and other industrial control systems (ICS/SCADA),

• transportation and aviation networks,

• road traffic management systems, and

• enterprise IT environments in foreign countries.

The architecture supports hundreds of trainees and thousands of concurrent connections, with “worker nodes” exposed to the public internet and a separate internal command layer that records all activity for evaluation. Reporting around the leak says foreign infrastructure in regions around the South China Sea and the Indochina peninsula is specifically modeled in scenarios—that is, the systems of China’s immediate neighborhood. A social‑media summary of the trove characterizes Expedition Cloud as being used to simulate attacks on neighboring countries’ power grids and transport infrastructure, with AI tools assisting in scenario planning and execution.

Why this matters

• From one‑off hacks to rehearsed disruption. Earlier contractor leaks (I‑Soon, Knownsec) highlighted mass espionage and long‑term access. Expedition Cloud is purpose‑built to practice disruption of critical infrastructure, not just exfiltration.

• Crisis playbooks for the neighborhood. By modeling grids, ports, and transport systems in Southeast Asia and along its periphery, Beijing is building a playbook for using cyber disruption as a coercive tool in regional crises short of open conflict.

• Civil–military fusion in cyberspace. The range reflects a mature ecosystem in which PLA units, internal security agencies, and private firms train together, enlarging the pool of operators who can be mobilized for state-directed campaigns.

For governments in the region, the likely response will be less public confrontation and more quiet hardening: stronger segmentation of ICS networks, tighter controls on remote access to utilities and transport, and more demanding security baselines for vendors of “smart” infrastructure.

Hong Kong: National security doctrine—and Jimmy Lai’s 20‑year sentence

Beijing has paired an assertive narrative on Hong Kong’s role in China’s national security architecture with the harshest punishment yet for a figurehead of the city’s pro‑democracy movement.

On 9–10 February, China’s State Council Information Office released a white paper titled “Hong Kong: Safeguarding China’s National Security Under the Framework of One Country, Two Systems.” According to Xinhua and China Daily summaries, the document:

• stresses the “fundamental responsibility” of the central government for national security in Hong Kong;

• casts safeguarding national security as Hong Kong’s “constitutional responsibility,” to be implemented through local legislation and institutions;

• claims the National Security Law (NSL) has taken Hong Kong “from chaos to stability and prosperity”; and

• promotes the notion of “high‑standard security for high‑quality development” as the guiding principle for the city’s future.

Almost simultaneously, Hong Kong’s courts delivered a landmark sentence in the city’s biggest media‑related national security case. On 8–9 February, Jimmy Lai, the 78‑year‑old founder of the now‑defunct pro‑democracy tabloid Apple Daily, was sentenced to 20 years in prison under the NSL and colonial‑era sedition laws.

• Lai had been convicted in December on two counts of conspiracy to collude with foreign forces and one count of conspiracy to publish seditious material, after a 156‑day trial held without a jury before a panel of government‑designated judges.

• Prosecutors argued that Lai used Apple Daily and his foreign contacts—citing meetings with senior US officials—as part of a campaign to lobby for sanctions and other punitive actions against China and Hong Kong.

• Rights groups and media organizations, including the Committee to Protect Journalists and the Society of Professional Journalists, condemned the verdict and sentence as a “sham conviction” and a severe blow to press freedom; CPJ and others have called for Lai’s immediate release.

Lai has been in detention since 2020 and is already serving separate sentences linked to protest‑related convictions. With the new 20‑year term, he is unlikely to leave prison unless there is a substantial political shift in Beijing’s approach to Hong Kong.

Why this matters

• Doctrine meets enforcement. The white paper and Lai’s sentencing are two sides of the same coin: Beijing sets the doctrinal frame (“patriots governing Hong Kong,” security as precondition for development) and the courts then deliver visible, exemplary punishments under that framework.

• Rule‑of‑law optics. Formally, the case proceeded through Hong Kong’s courts; substantively, the process—non‑jury trial, government‑designated judges, expansive readings of “foreign collusion”—reinforces perceptions that the NSL has structurally altered the city’s legal order.

• Signal to media and civil society. Lai was not just any publisher; Apple Daily was a flagship pro‑democracy outlet. His conviction and 20‑year sentence underscore that media, NGOs, and business elites that engage international partners on political issues now operate under a sharply narrower definition of permissible activity.

For regional observers, the combination of the white paper and the Lai sentence effectively locks in a national‑security‑first model for Hong Kong, with implications for information flows, corporate risk assessments, and how other contested spaces (from Taiwan to border regions) might be governed.

Bangladesh: a Chinese drone factory on India’s doorstep

While Hong Kong illustrates internal security consolidation, South Asia is seeing a quieter but significant shift in external security alignments. A new analysis of Bangladesh’s politics argues that China is poised to widen its footprint as India–Bangladesh ties fray following Sheikh Hasina’s departure and the banning of her party ahead of elections.

The most concrete defense‑related development highlighted is a Chinese‑backed drone manufacturing facility near the Bangladesh–India border, part of a broader set of military‑industrial and infrastructure deals. Chinese Ambassador Yao Wen has been highly active in Dhaka, engaging across the political spectrum and pushing projects that include:

• a defense agreement covering drone production and technology transfer;

• continued movement on big‑ticket infrastructure, including power and transport; and

• discussions on expanded economic cooperation at a time when relations with India have cooled.

Trade with China—around 18 billion dollars annually, overwhelmingly in China’s favor—has given Beijing substantial economic leverage, and Chinese investment has remained comparatively resilient amid Dhaka’s political turmoil. Analysts quoted in the coverage argue that Bangladesh is likely to lean further towards China for economic and defense cooperation, even as its geography makes it impossible to ignore India.

Why this matters

• From ports and power to platforms. A Chinese drone factory adds a high‑tech, explicitly military dimension to a footprint that had been dominated by ports, power plants, and roads. It deepens China’s role in shaping Bangladesh’s force structure and doctrine, including surveillance and strike capabilities in the Bay of Bengal.

• Strategic encirclement concerns for India. Together with Chinese‑linked facilities in Pakistan, Sri Lanka, and Myanmar, the Bangladesh drone facility will reinforce Indian perceptions of a tightening Chinese security ring around its maritime approaches and vulnerable northeast.

• Third‑country risk. For Bangladesh, the balancing act is to extract maximum benefits from China while avoiding being pulled directly into Sino‑Indian confrontation. For external partners—including Japan, the US, and the EU—the space for offering alternative security and infrastructure packages may narrow as Chinese projects become more embedded.

This will likely remain a slow‑burn structural shift rather than a sudden crisis, but it will shape India’s military posture and diplomatic outreach in the Bay of Bengal and eastern Himalayas.

February 2, 2026

Asia experienced a series of significant security and defense developments over the past 48 hours that signal deepening strategic realignment and accelerating military modernization across the region.

The world is changing, and you feel the jolt of this tumultuous journey. No two times are the same, and no two journeys are the same. Life is all about choices. If you choose to stay — or you choose to roll the dice — these are choices. But great stories come from different choices, unfortunately, not the safest of paths. You can just do things, as the internet slang goes. Trust me, you really can. Back to geopolitics.

Russia explicitly reinforced its strategic alignment with China on Taiwan while expressing concern over Japan’s militarization. Singapore announced major defense capability upgrades, including a $2.3 billion maritime patrol aircraft acquisition, while simultaneously launching a national civil-military resilience exercise amid cyber threats. Pakistan advanced its Chinese submarine acquisition program—a landmark development that reshapes the South Asian naval balance. Meanwhile, China faces a credibility crisis in South Asia, with the Belt and Road Initiative stalled by security disruptions and failed diplomatic leverage. These developments reveal a region in flux, where alliance architectures are shifting, military modernization is accelerating, and economic power is proving insufficient without security capacity.

RUSSIA-CHINA COORDINATION ON TAIWAN: EXPLICIT ALIGNMENT

The Statement

On February 1-2, 2026, Russian Security Council Secretary Sergei Shoigu conveyed to Chinese Foreign Minister Wang Yi that “Moscow continues to support Beijing over Taiwan, as Russia keeps a close eye on Japan’s ‘accelerated militarization.’” The statement was reported by the Russian state news agency TASS and marks an explicit reinforcement of the Russia-China “no limits” strategic partnership declared in February 2022.​

Strategic Significance

The timing and tenor of Shoigu’s statement carry specific weight. Russia, engaged in Ukraine and facing Western sanctions, demonstrates no intention of adopting strategic ambiguity on Taiwan—unlike the Trump administration. Moscow’s explicit backing of Beijing’s Taiwan position serves multiple purposes: reinforcing the Russia-China entente, signaling that the Ukraine crisis has not divided their broader strategic alignment, and warning the West (particularly the U.S.) that Taiwan coercion carries costs for Japan and the broader Indo-Pacific alliance structure.

The additional message—Russian concern about Japan’s “accelerated militarization”—reflects Moscow’s assessment that Tokyo’s defense spending increases (now approaching 2% of GDP) represent part of a coordinated U.S.-Japan containment strategy. Russia interprets Japan’s military expansion as a proxy challenge to both Beijing and Moscow, requiring explicit coordination in response.

Implication: Beijing now has explicit Russian support for coercive Taiwan action, reducing the diplomatic cost of escalation in the Taiwan Strait from Moscow’s perspective.

SINGAPORE’S DEFENSE MODERNIZATION SURGE: MARITIME POWER PROJECTION AND DOMESTIC RESILIENCE

P-8A Poseidon Acquisition

On January 31, 2026 (announced February 2), the U.S. State Department approved a potential $2.316 billion Foreign Military Sale to Singapore for up to four Boeing P-8A Poseidon maritime patrol and reconnaissance aircraft. The package includes eight Mk 54 Mod 0 lightweight torpedoes, advanced mission systems (AN/APY-10 maritime surveillance radar, AN/AQQ-2(V) acoustic systems, MX-20HD electro-optical/infrared turrets), identification systems, electronic warfare packages, and comprehensive training and sustainment support.​

The acquisition represents Singapore’s systematic recapitalization of its maritime surveillance fleet, replacing aging Fokker 50 airframes (in service since the early 1990s) with a platform explicitly designed for anti-submarine warfare and maritime domain awareness in the contested waters of the South China Sea. The P-8A’s endurance (6,000+ nautical miles) enables Singapore to conduct deep-ocean surveillance and coordinate with allied naval forces across the Indian Ocean and the Strait of Malacca.

Domestic Resilience Initiative

Simultaneously, on February 1, 2026, Singapore launched Exercise SG Ready (ESR) 2026—the third edition of its national Total Defence exercise—involving over 1,000 organizations in simulated activities focused on digital connectivity degradation and prolonged power outages. The exercise runs February 1-15 and is explicitly framed as preparation for “geopolitical uncertainties and hybrid threats.”​

Coordinating Minister for National Security K Shanmugam’s Total Defence message emphasized that Singapore’s critical infrastructure came under cyberattack in 2025 by “a highly sophisticated actor” and that “foreign parties had tried to divide the community and undermine trust in the government.” The exercise tests organizational readiness for infrastructure disruption and social cohesion under stress.​

Strategic Implication

Singapore’s dual emphasis—on maritime military capability projection and domestic cyber-resilience—reflects awareness of multi-layered threats: external (South China Sea assertiveness, naval challenges) and internal (cyberattack, information warfare, infrastructure disruption). The P-8A acquisition, combined with Singapore’s existing submarine fleet (six Type 218SG submarines with German partners), creates a comprehensive maritime awareness picture extending from the Malacca Strait to the central Indian Ocean.

PAKISTAN’S SUBMARINE PROGRAM ADVANCES: RESHAPING SOUTH ASIAN NAVAL BALANCE

Fourth Hangor-Class Launch

On December 17, 2025, Pakistan’s fourth Hangor-class submarine, PNS Ghazi, was launched at Wuchang Shipbuilding Industry Group in Wuhan, China—with the announcement becoming widely reported in February 2026. This milestone marks a significant acceleration in Pakistan’s submarine procurement under its $5 billion agreement with China for eight Hangor-class diesel-electric submarines.​

The Hangor-class (based on China’s Type 039A Yuan-class) features air-independent propulsion systems enabling extended underwater endurance, advanced stealth design, and weapon systems capable of engaging targets at “standoff ranges.” Under the agreement, four submarines are being built in China while the remaining four will be constructed at Pakistan’s Karachi Shipyard & Engineering Works under technology transfer arrangements, designed to strengthen Pakistani shipbuilding expertise.​

Projected Timeline and Capability

Pakistan’s Navy Chief Admiral Naveed Ashraf stated that the first Hangor-class submarine is expected to enter service in 2026, with all eight expected to be operational by 2028. While the original timeline projected delivery between 2022-2023, the program has experienced delays typical of large military procurement programs. Three submarines have now been launched, with all four being built in China, currently undergoing sea trials and “final stages of handover.”

The Hangor acquisition fundamentally alters South Asia’s undersea balance. Pakistan, which currently operates aging diesel-electric submarines acquired from France (1990s-era Agosta-class), will obtain a modern fleet with substantially greater endurance, stealth, and weapon range. India’s naval advantage—currently built on three nuclear submarines and three diesel-electric boats (French, German, Russian designs)—faces new competitive pressure from Pakistan’s deep-strike capability.

Strategic Drivers

Admiral Ashraf characterized the Hangor deal as reflecting “shared strategic perspective, mutual trust and a long-standing partnership” with China, extending beyond hardware to “shipbuilding and training, improved interoperability, research initiatives, technology sharing, and industrial cooperation.” The submarines will patrol the North Arabian Sea and Indian Ocean, enhancing Pakistan’s A2/AD (anti-access/area denial) capabilities and extending power projection toward the Middle East.​

Implication: Pakistan’s submarine fleet modernization signals Beijing’s confidence in Islamabad as a strategic partner and rebalances the naval competition in the Indian Ocean, where India has traditionally enjoyed superiority.

CHINA’S SOUTH ASIA CREDIBILITY CRISIS: ECONOMIC POWER WITHOUT SECURITY CAPACITY

The CPEC Failure Rate

A comprehensive analysis released February 1, 2026, reveals that the China-Pakistan Economic Corridor (CPEC)—Beijing’s flagship Belt and Road Initiative project in South Asia—is only 40% complete after a decade. Of the $60 billion committed since 2015, only $27 billion has been realized, with projects repeatedly delayed by security threats, political instability, and governance challenges.​

In Pakistan’s Balochistan province, three critical unfinished projects remain under persistent attack: the Gwadar East Bay Expressway, the Hub Coal Power Project (1,320 MW), and the Nokundi-Mashkhel-Panjgur Road. The Baloch Liberation Army (BLA) has conducted 71 attacks across 51 locations in Pakistan by May 2025, directly targeting Chinese nationals and infrastructure. Between 2013 and 2023, the BLA killed at least 20 Chinese nationals and injured 34.​

Afghanistan’s Destabilization

In Afghanistan, China’s strategic investments exceed $10 billion and include the Aynak copper mine (delayed 16 years due to NATO-Taliban conflict before Chinese extraction began in 2025), the Amu Darya oil contract spanning three northern provinces, and a planned $10 billion lithium mining project. Yet in November 2025, two consecutive attacks on the Afghan-Tajik border (November 26 and 30) killed seven Chinese nationals, signaling both the insecurity of these zones and the persistence of anti-Chinese militant activity.​

The Security-Development Nexus

The analysis identifies what it terms the “security-development nexus”: economic power, without security capacity and external military capability, cannot translate into governance and influence. Unlike the United States, which can project military force to protect its infrastructure investments, China lacks the institutional capacity and strategic doctrine to conduct external security operations. This fundamental asymmetry exposes China’s Belt and Road Initiative to disruption in unstable regions where security is the prerequisite for economic activity.​

The failures in Afghanistan and Pakistan extend beyond financial and logistical delays. They have damaged Beijing’s narrative of benevolent, efficient development and strategic prestige. Recent inconclusive Taliban-Pakistan negotiations—where China attempted to mediate—further demonstrate Beijing’s limited leverage over its two key South Asian partners to mitigate tensions and safeguard its economic projects.​

Implication: China’s model of projecting geopolitical influence through economic development, without accepting the strategic costs of security provision, faces fundamental structural limitations. Success or failure in managing the CPEC and Afghanistan investments will shape Beijing’s regional hegemony and global leadership credibility.

REGIONAL ECONOMIC AND POLITICAL DEVELOPMENTS

Cambodia’s UNCLOS Accession: Opening New South China Sea Disputes

Cambodia formally ratified the United Nations Convention on the Law of the Sea (UNCLOS) in late January 2026, after a 40-year delay in joining the international maritime framework. The decision opens a new diplomatic front with Thailand over disputed oil fields off Koh Kood Island, which becomes subject to UNCLOS maritime boundary provisions. This represents a significant shift in Cambodia’s strategy toward multilateral maritime law—a development potentially advantageous to maritime claimants (like the Philippines and Vietnam) in South China Sea disputes, though Cambodia’s relationship with China may complicate its practical application.​

India’s Defense Budget: Insufficient Modernization

India announced its FY25-26 defense budget allocation at INR 6.81 trillion ($77.8 billion) on February 1, 2026. While this represents budget growth, defense analysts assess it as insufficient to meet India’s military modernization requirements amid rising Chinese capabilities, Pakistan’s submarine expansion, and Indian Ocean security demands. The budget allocation reflects continued constraints on India’s defense spending relative to China’s more robust military investment.

As I wrote on X, New Delhi has accepted the fate of the new status quo vis-à-vis China along the Line of Actual Control (LAC). Here is an op-ed by Mihir Sharma in Bloomberg that’s worth reading: https://www.bloomberg.com/opinion/articles/2026-01-28/india-is-resigned-to-a-new-status-quo-with-china.

Over the past week, we saw the purging of Chinese military officials Zhang Youxia and Liu Zhenli — a dramatic development. There is ample speculation among China watchers about what’s behind the downfall and its implications. I will spare you from that speculation for now, while giving you a deep dive into how Chinese state media and public narrative framed the purge.

Military Earthquake in Beijing: What China’s State Media Reveals—And Hides—About the Zhang Youxia Purge

On January 24, China’s Ministry of Defense issued a terse 30-second statement that sent shockwaves through Beijing’s elite circles. Zhang Youxia, the 75-year-old vice chairman of the Central Military Commission and China’s highest-ranking general after Xi Jinping, was under investigation. So was Liu Zhenli, the 61-year-old chief of the PLA’s Joint Staff Department. Both were accused of “serious violations of discipline and law”—Party-speak for corruption—and that was essentially all the public would hear directly.

But what China’s state media did say in the hours and days that followed tells a more revealing story than what it didn’t. And that’s where things get interesting.

The Official Choreography

The rhythm of Beijing’s propaganda machine is as predictable as it is controlled. Announcement Saturday morning. Editorial from the People’s Liberation Army Daily on Sunday. Message discipline was enforced across state outlets. No press conferences. No details. No follow-up—at least not at first.

Xinhua, China’s official news agency, framed the investigation as “China resolute in winning anti-corruption war in military,” recycling the familiar narrative that Xi Jinping’s decade-long anti-corruption campaign has finally reached even the most senior ranks. The headline was clinical, almost bureaucratic. But the editorial that followed from the PLA Daily—the military’s official newspaper—was anything but.

This is where you see the actual signal buried beneath the carefully constructed surface messaging.

Reading Between the Lines: The PLA Daily Editorial

On January 25, the PLA Daily published what analysts are calling the harshest condemnation of a fallen military figure since Xi came to power. The language wasn’t just severe—it was different. And that difference matters.

Zhang and Liu hadn’t merely “undermined” the CMC chairman’s authority, as previous fallen generals were accused of doing. They had “seriously trampled on and undermined“ it. The shift from “undermining” to “trampling on” is, according to Singapore-based analyst Yang Zi, evidence of something more than standard corruption: “You can feel the bitterness in the paragraph.”

The military newspaper went further. Zhang and Liu, it said, had:

• “Gravely betrayed the trust placed in them” by the Party

• “Severely fueled political and corruption problems that threaten the Party’s absolute leadership over the armed forces”

• Damaged “the political and ideological foundation of unity and progress among all military personnel”

• Inflicted “grave harm on efforts to strengthen political loyalty in the military”

The editorial wasn’t primarily about embezzled money or sweetheart military contracts, though those may well be factors. It was about loyalty, authority, and control. It was about what happens when even the untouchable become touchable.

Besides, the speculation about Zhang Youxia leaking nuclear secrets, as reported by WSJ, doesn’t hold water. That’s most likely Beijing trying to set the narrative.

I will be waiting for more leaks to follow.

The Real Message: “No One Is Safe”

Here’s what state media was trying to communicate to Beijing’s elite: the anti-corruption campaign has no off-limits zones. Not rank. Not longevity. Not even decades-long personal relationships with Xi Jinping himself.

Zhang and Xi’s fathers had fought side-by-side during the Chinese Communist Party’s early years in the 1930s, before the founding of the People’s Republic. Xi made a special exception to let Zhang serve past the mandatory retirement age. Zhang was the kind of insider you don’t touch. Yet he was touched. Immediately. Without warning.

The state media narrative emphasized Xi’s determination: “no matter who they are or what position they hold, anyone involved in corruption will be dealt with without leniency.” The message was consistent across Xinhua, China Daily, and the PLA Daily. But state media carefully avoided saying whether this was about corruption, loyalty, competence, or something else entirely.

What’s Not Being Said: The Censorship Story

This is where the real indicator of concern emerges. Inside China, the Zhang Youxia story has been largely suppressed. Users on Weibo, China’s Twitter-like platform, report finding little to no coverage when searching for information about the investigation. One Reddit user documented their Chinese wife finding nothing when she searched—despite Zhang’s position as China’s most senior uniformed officer.

Compare that to the West, where international media outlets have been flooded with reporting, including leaked allegations that Zhang shared nuclear weapons secrets with the United States and accepted bribes for promotions. The Wall Street Journal reported that military officers were briefed on allegations that Zhang “formed political cliques” and accepted “huge sums of money in exchange for official promotions.”

The fact that Beijing felt compelled to suppress domestic discussion while international accounts spread unchecked suggests genuine nervousness about how this plays internally. The leadership isn’t comfortable with this narrative spreading widely among the Chinese public or PLA rank-and-file. State media can control the tone of official messaging, but it can’t fully control what people think when they notice that China’s top general has vanished from public life.

Why the Harshness? Three Theories

The PLA Daily’s particularly bitter language has analysts offering three competing interpretations, none of which state media will confirm or deny:

Theory One: Corruption, But Systematic. Zhang oversaw military procurement for years—an area notorious for graft in the PLA. The Party may genuinely view his tenure as having allowed widespread corruption that undermined military modernization ahead of the 2027 centenary of the PLA and the ambitious 2049 “China Dream” deadline for military dominance.

Theory Two: Disloyalty. Some analysts suspect Zhang may have subtly resisted Xi on key policy decisions, particularly regarding Taiwan. A 2024 editorial Zhang authored noted that the military faced challenges in executing “complex joint operations”—which some U.S. analysts interpreted as coded criticism of readiness. Removing Zhang, in this view, eliminates the last credible voice of caution in Xi’s inner circle.

Theory Three: Paranoia and Control. Xi has now purged five of the six generals he personally promoted to the Central Military Commission in 2022. He sits atop a military leadership consisting of himself and one other general, Zhang Shengmin, who has built his career as a discipline inspector—essentially, Xi’s enforcer. The message state media can’t openly send but seems desperate to communicate is: Xi’s authority is absolute and unchallengeable.

What This Means for Taiwan

This is the question dominating discussions in Washington, Tokyo, and Taipei. Does removing Zhang Youxia and Liu Zhenli—both experienced commanders—make military action against Taiwan more likely or less likely?

State media carefully avoids this question. But the international consensus leans toward the former concern: with moderating voices purged, Xi now has fewer institutional checks on adventurism. One analyst put it bluntly: “With his purge and that of his associates, there is far less resistance in the system.”

Taiwan’s defense ministry is “monitoring abnormal leadership changes,” and officials have stated they’re watching for shifts in Beijing’s intentions. But as one expert noted, this purge “raises broader questions about political stability in a rising nuclear superpower” and could, perversely, make Xi more hesitant to risk military action while consolidating internal control. Lately, Taiwan hasn’t been able to give any deep insights into the internal developments in Beijing — so I wouldn’t be holding my breath.

The Domestic Signal

What state media is saying—loudly and repeatedly—is that 2026 is a critical year. The PLA Daily editorial emphasized that this is “the launch of the 15th Five-Year Plan and a critical year in the arduous journey towards achieving the centenary goals of the PLA.” The implication: the military needs complete unity and loyalty to achieve Xi’s ambitions.

For the PLA officer corps reading between the lines of that editorial, the message is chilling: dissent is disloyalty, and disloyalty ends careers—or worse. Careerists will learn to keep their professional opinions to themselves. Risk-takers will be cautious. Initiative will be suppressed in favor of loyalty displays.

From state media’s perspective, this is the anti-corruption campaign working as intended. From an institutional perspective, it’s potentially catastrophic for the PLA’s operational capacity and decision-making process.

The Pattern

Zhang’s fall is part of a larger purge. Since 2024, six senior military officials have either been expelled from the Party or are under investigation. The official count of military officials punished since Xi came to power in 2012 exceeds two dozen, with particularly harsh treatment in recent years. The PLA Daily claims this demonstrates Xi’s “zero tolerance” for corruption. The institutional reality suggests it demonstrates Xi’s zero tolerance for anyone who might say no.

State media can’t admit that, so it falls back on the familiar language of Party discipline, anti-corruption, and the “absolute leadership of the Party over the military.” These aren’t lies, exactly. But they’re not the whole story either.

What We’re Watching

The key indicators to follow in coming weeks:

1. Domestic Coverage: Will state media eventually run longer pieces explaining the investigation, or will it remain frozen at the terse announcement stage?

2. Military Appointments: Who gets promoted to fill the CMC vacancies created by these removals? Younger, more ideologically aligned officers, or seasoned commanders willing to challenge Xi?

3. Taiwan Posture: Does the PLA shift toward more aggressive posturing now that moderating voices are sidelined, or does Xi focus inward on consolidation?

4. International Messaging: Will Beijing attempt to spin this narrative abroad, or will it remain largely a domestic suppression operation?

5. A more assertive military action, perhaps in the South China Sea, to showcase stability in the PLA.

State media will continue to frame this as a triumph of Xi’s anti-corruption campaign. Analysts will continue to debate whether it’s corruption, disloyalty, or Xi’s deepening paranoia about control. The truth, as is often the case in Beijing, is probably some combination of all three—and state media’s careful silence on the specifics is the most honest thing it’s said.

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Overview

Over the last 24 hours, Asia witnessed significant developments across defense, security and economic fronts. These stories reveal how geopolitics, trade policies and domestic issues are shaping the region’s trajectory. Highlights include Vietnam’s ambitious growth pledge, Taiwan’s push to build a “democratic” high-tech supply chain with the U.S., South Korea’s sluggish economic performance, Japan’s early election and its implications for monetary policy, and incidents affecting security from Afghanistan to Pakistan and Australia.

Economic & Market Developments

Vietnam sets an aggressive growth target

Growth pledges – At the Communist Party Congress in Hanoi, Vietnam’s General Secretary To Lam committed to achieving annual economic growth of above 10% until 2030. Lam argued that cutting red tape, investing in infrastructure to cope with climate change, expanding global trade and combating corruption would be critical. The government recorded a record trade surplus with the U.S., helped by tariffs on Vietnamese exports.

Taiwan–U.S. supply-chain deal and tariffs

Tariff reduction – Taiwan’s Vice Premier Cheng Li-chiun announced that under a new deal with Washington, general U.S. tariffs on Taiwanese exports will be cut from 20% to 15%; lower tariffs will apply to chipmakers that invest in U.S. production facilities. Taipei will invest US $250 billion in American semiconductor, AI and clean-energy projects and provide another US $250 billion in credit. The deal aims to build a “democratic” high-tech supply chain. Cheng stressed that Taiwan is extending rather than relocating its supply chain. Now, this is a political decision as much as it’s a trade decision. There is already an undercurrent of domestic tension over the decision, and we will need to see how people in Taiwan react to this reshoring of the chains.

China’s Population Decline Accelerates in 2025

China’s population fell for a fourth consecutive year in 2025, with births dropping to a record low of 7.92 million — down 17% from 2024 — according to official data. The total population shrank by 3.39 million to 1.405 billion, while deaths rose to their highest level since 1968, highlighting the scale of the country’s demographic crisis.

The decline comes despite new government incentives, including a 90 billion yuan childcare subsidy program and expanded coverage for childbirth and IVF. High living costs, weak job prospects, and urban childcare expenses continue to discourage young people from starting families. The average cost of raising a child to age 18 now exceeds six times China’s GDP per capita.

With fertility at around one birth per woman and nearly a quarter of the population aged over 60, Beijing faces growing pressure on labor supply, pension systems, and long-term economic growth — making demographics an increasingly central policy challenge.

South Korea’s economy barely grows

Weak Q4 growth – A Reuters poll showed that South Korea’s economy probably expanded by just 0.1% quarter-on-quarter in Q4 2025 (vs 1.3% in Q3) and by 1.9% year-on-year. Economists attributed the slowdown to weak domestic demand, particularly in construction investment and discretionary consumption. Exports remained a bright spot: official trade data showed exports rose 13.4% in December despite a 15% U.S. tariff on all South Korean goods. Economists noted that government cash-handout programs boosted consumption in Q3 but their effect faded in Q4.

Policy implications – The poll suggested the Bank of Korea is likely to hold rates after signaling the end of its easing cycle and maintain a cautious stance because the won remains weak. Economists said further rate cuts are unlikely given currency weakness and high house prices.

Japan’s fiscal-monetary cross-currents

Snap election – Prime Minister Sanae Takaichi will dissolve parliament and call a 8 February national election to seek voter approval for increased spending, tax cuts and a new security strategy that will accelerate defense spending. She promised a two-year halt to the 8% consumption tax on food, a move that government officials say would cost about ¥5 trillion (US $32 billion) in revenue and has already pushed 10-year Japanese government bond yields to a 27-year high. The snap election is intended to strengthen her grip on the ruling Liberal Democratic Party ahead of an anticipated defense build-up.

BOJ outlook – The Bank of Japan is expected to keep its policy rate at 0.75% at its meeting on 23 January but may raise its growth forecast and signal that more rate hikes are likely. Analysts note that yen depreciation and Takaichi’s tax-cut plans complicate the central bank’s decisions. The BOJ has already raised rates to a 30-year high but may consider further hikes as the yen slides and inflation broadens. Some policymakers even see room for an April rate increase.

Commodity & currency markets

Oil prices buoyed by China and tariffs – Oil prices rose as China’s economy grew 5.0% in 2025, exceeding expectations and supporting demand optimism. Brent crude climbed 0.3% to US $64.13 per barrel, and the U.S. West Texas Intermediate contract added 0.4% to US $59.69. Analysts said the data reinforced China’s resilience in exports and refinery output. Markets also watched U.S. President Donald Trump’s threat to impose additional tariffs on European nations to force a deal for buying Greenland; the threats weakened the U.S. dollar and lent further support to oil prices.

Indian rupee pressure – Traders warned that the Indian rupee remains vulnerable near ₹91 per U.S. dollar; the Reserve Bank of India has been selling dollars intermittently but not defending a specific level. The currency is susceptible to further declines given sustained dollar demand and global trade uncertainties.

BHP’s production and price concessions – Mining giant BHP Group reported a record first-half iron-ore output (146.6 million tonnes), but accepted lower prices in negotiations with Chinese buyers and flagged a 20% cost increase at its Jansen potash project. Chinese steel mills have been told to avoid certain BHP ores, potentially tightening spot-market supply.

Defense & Security Developments

Japan: Election to bolster defense build-up

Prime Minister Sanae Takaichi’s snap election has a clear security rationale. She intends to implement a new national security strategy that will raise defense spending to 2% of GDP, breaking Japan’s long-standing cap of around 1%. Takaichi said China’s military exercises around Taiwan and “economic coercion” through control of key supply-chain materials make the international security environment more severe. The early vote is designed to capitalize on her popularity and push forward the defense build-up.

Korean Peninsula: Drone incident stokes tensions

South Korean President Lee Jae Myung revealed that a civilian drone had flown from South Korea into North Korea, exposing a loophole in the monitoring system. Lee called the incident “akin to starting a war” and warned that such provocations could harm the economy and tensions on the peninsula. He ordered a thorough investigation; if a South Korean citizen deliberately flew the drone, they could face criminal charges. North Korean leader Kim Jong Un’s sister, Kim Yo Jong, urged Seoul to investigate the incident and hinted at serious consequences.

Afghanistan: Islamic State targets Chinese-run restaurant

A suicide bomber attacked a Chinese-run restaurant inside a hotel in Kabul’s Shahr-e-Naw district, killing one Chinese national and six Afghans and injuring several others. The Islamic State group claimed responsibility, stating it targeted Chinese citizens over alleged abuses of Uyghurs. The blast underscores the persistent security risks facing foreign businesses and China’s increasing exposure in Afghanistan.

Pakistan: Deadly mall fire

A massive fire at the Gul Plaza shopping mall in Karachi killed at least 21 people and left more than 60 missing. The blaze burned for more than 24 hours, causing portions of the building to collapse, hampering rescue efforts and sparking public anger over perceived delays. Authorities promised an inquiry; many survivors lost businesses and loved ones.

Australia: New gun laws and shark-attack closures

Gun reforms – In the wake of the December Bondi mass shooting (15 fatalities), Australia’s lower house passed comprehensive gun-control legislation that will create a national gun buyback program and tighten background checks. The reforms limit the number of firearms per individual and require more frequent license renewals. Prime Minister Anthony Albanese’s government expects the Senate to approve the legislation soon, despite conservative opposition.

Beach safety – Authorities closed dozens of beaches along Australia’s east coast, including in Sydney, after four shark attacks in two days. Heavy rain left waters murky, attracting bull sharks, and several surfers—some critically injured—required hospitalization. Surf Life Saving New South Wales urged swimmers to use pools until conditions improve.

Other regional dynamics

Japan–Philippines security pacts – Though signed five days earlier, the effects of the new Acquisition and Cross-Servicing Agreement between Japan and the Philippines continue to reverberate. The pact allows their militaries to exchange supplies and services and reflects increasing strategic cooperation amid rising tensions in the Taiwan Strait. Japan also pledged US $6 million to build facilities for inflatable boats it donated to boost the Philippine naval capacity.

Over the past two days (January 14–16, 2026), several big developments have reshaped Asia’s military, economic and geopolitical landscape. Canadian Prime Minister Mark Carney made his first official visit to China since 2017, signing eight memorandums of understanding with President Xi Jinping and Premier Li Qiang on January 15–16. The agreements focus heavily on energy cooperation, positioning Canada as a key supplier of oil and LNG to China, but failed to resolve ongoing tariff disputes over Canadian canola exports.

The U.S.-Taiwan trade deal grabbed most of the headlines, but there’s also been notable action on defense agreements in Southeast Asia, monetary policy shifts in China, and fresh moves in the semiconductor industry. Here’s what happened.

Canadian Prime Minister Mark Carney Visits China

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I hope your 2026 has kicked off well!

Cross-Strait Tensions

As we look back at the past day in East Asia, cross-strait tensions remain a central theme. Beijing has doubled down on its campaign against pro-independence politicians by extending its “secessionist” blacklist. On 7 January China’s Taiwan Affairs Office announced that Interior Minister Liu Shyh-fang, Education Minister Cheng Ying-yao and prosecutor Chen Shu-Yi are barred from entering mainland China, Hong Kong and Macau. The ruling Communist Party labelled them “die-hard Taiwan independence secessionists” and warned others not to challenge its sovereignty claims. Taipei fired back, calling the bans illegitimate and insisting that only Taiwan’s people have the right to decide their future. The Mainland Affairs Council said Beijing was trying to intimidate all Taiwanese into silence. This move comes just a week after the People’s Liberation Army staged its largest war games around the island, firing dozens of rockets and deploying a fleet of warships and aircraft, which forced flight cancellations and filled social media with AI-generated disinformation and millions of cyber-attacks.

China-Japan Trade and Rare-Earth Dispute

The Taiwan issue is also coloring China’s economic relations with Japan. The Chinese Commerce Ministry has opened an anti-dumping probe into dichlorosilane, a chemical used for semiconductor manufacturing, alleging that Japanese imports surged while prices fell by more than thirty per cent between 2022 and 2024. The investigation covers shipments from July 2024 through June 2025 and could last until January 2027. Observers see the probe, which follows China’s ban on exports of dual-use items to Japan, as retaliation for Japanese Prime Minister Sanae Takaichi’s remark that a Chinese attack on Taiwan could be an existential threat to Japan. Financial markets took notice: shares of Japanese chemical giants Shin-Etsu Chemical and Mitsubishi Chemical slipped in Tokyo trading, while Chinese rivals Tangshan Sunfar Silicon Industries and Hubei Heyuan Gas surged to their daily limit up. The dispute underscores how quickly geopolitical grievances can spill into trade and how both countries are scrambling to secure supplies of critical chip-making materials. Tokyo, which depends on China for around 60% of its rare-earth imports, has described Beijing’s export ban as “absolutely unacceptable”.

Beijing has also signalled that its spat with Japan could soon extend beyond semiconductor chemicals. According to state-run reports, Chinese officials are considering limits on exports of rare-earth elements to Japan in retaliation for Prime Minister Sanae Takaichi’s comments on Taiwan. These minerals are indispensable for high-tech manufacturing, and a new curb could reverberate through Japan’s auto and electronics industries. Analysts note that Japan has reduced its dependency since China last throttled rare-earth shipments in 2010, yet it still obtains roughly 60% of its supplies from China and remains almost entirely reliant for heavy rare earths used in electric-vehicle motors and other magnets. A Nomura Research Institute economist warned that even a three-month embargo—akin to the 2010 episode—would cost Japanese businesses about ¥660 billion (roughly US$4.2 billion) and shave 0.11 percentage points off GDP; a year-long ban, he added, could cut nearly 0.43 percentage points. Japanese automakers such as Subaru say they are closely monitoring the situation, but the prospect of broader rare-earth curbs underscores just how quickly a political row can threaten industrial supply chains.

Cambodia Extradition and Fraud Crackdown

Another significant development comes from Cambodia, where authorities have extradited three Chinese nationals, including an individual named Chen Zhi, to China. The country’s interior ministry said the men’s Cambodian citizenship had been revoked and that the handover followed a joint investigation into transnational crime. Chen Zhi’s name matches that of a Chinese-Cambodian tycoon whose Prince Group conglomerate has been sanctioned by the United States and Britain over accusations of running online scam centres that exploited trafficked workers. It is unclear whether the Chen Zhi extradited this week is the same person, but the case highlights a growing regional crackdown on online fraud networks. U.S. prosecutors have charged Chen with wire-fraud and money-laundering conspiracies, alleging he operated forced-labor cryptocurrency scams. Authorities across Asia—Singapore, South Korea, Taiwan and Hong Kong—have seized assets linked to such networks.

Technology and Economic Policies

China’s techno-industrial ambitions also made headlines. Regulators reportedly asked Chinese companies to halt orders for Nvidia’s advanced H200 AI chips while Beijing considers whether to block or approve the high-performance processors. The move is part of a broader push to steer companies toward domestic AI chips and reduce reliance on U.S. technology. In parallel, the industry ministry warned battery manufacturers to curb over-investment in electric-vehicle and energy-storage batteries, cautioning that unchecked capacity expansion could mirror the boom-and-bust cycle seen in the solar sector. Rising demand for energy-storage batteries—driven by the expansion of data centres—has encouraged companies to build new plants, but officials are urging orderly competition and better market supervision. On the financial front, sources tell Reuters that China’s financial regulator has extended a programme allowing banks to bulk-transfer non-performing personal loans until the end of 2026. The initiative, which initially covered major state banks but now includes regional banks and consumer finance firms, aims to help lenders cope with rising consumer defaults amid a slowing economy and property-sector slump.

Diplomatic Manoeuvring

Diplomatic maneuvering rounded out the day’s stories. During South Korean President Lee Jae-myung’s state visit to Beijing, President Xi Jinping used the proverb “three-foot-thick ice does not melt all at once” to signal that China’s informal ban on Korean pop culture will be eased gradually. Lee proposed Go tournaments, soccer matches and even panda loans to help thaw public sentiment and called for balanced people-to-people exchanges. Xi agreed that such exchanges were acceptable but stressed that progress must be incremental. Meanwhile, China’s public security minister Wang Xiaohong hosted his Pakistani counterpart and pledged deeper cooperation against terrorism and telecom fraud, stating that Beijing and Islamabad must work together to counter security risks and safeguard national stability.

Conclusion

In summary, the last 24 hours have shown how geopolitics, trade and domestic politics are tightly interwoven across East Asia. The cross-strait dispute continues to cast a long shadow, prompting punitive actions, war games and cyber-operations. Trade tensions between China and Japan have escalated from rhetorical sparring to concrete investigations and market volatility. Regional authorities are cracking down on sophisticated scam networks that exploit workers and launder funds. And within China, regulators are balancing their ambitions for technological leadership with the need to manage overcapacity and financial risk. All of this is unfolding against a backdrop of cautious diplomacy, with Beijing signalling a gradual relaxation of its cultural chill with South Korea while urging Pakistan to collaborate more closely on security.

Have a great week!

China has built a deep political and economic relationship with Venezuela over the past two decades. During the 2024 Venezuelan presidential election, the Chinese foreign ministry publicly congratulated President Nicolás Maduro on his re‑election and stressed that Beijing would continue to “deepen the all‑weather comprehensive strategic partnership.” Chinese state media framed the vote as proof that Venezuelans wanted stability rather than regime change and predicted the United States would have difficulty rallying opposition to Maduro. In June 2024 Foreign Minister Wang Yi hosted Venezuelan foreign minister Yván Gil in Beijing and emphasized that the two countries would “jointly oppose external interference and bullying,” deepen cooperation in energy, technology and finance, and defend Global South solidarity.

Rising tensions in 2025: naval build‑ups, seizures and the Monroe Doctrine

Sept 2025: U.S. naval presence prompts alarm

China’s official news agency Xinhua reported that Venezuelan President Maduro labelled the U.S. naval deployment near Venezuelan waters as the country’s “biggest threat in 100 years.” He dismissed U.S. allegations of drug trafficking and described Washington’s actions as unjustified. Chinese commentators echoed this narrative. On 15 September the foreign ministry’s spokesperson Lin Jian warned that U.S. seizures of a Venezuelan fishing boat and military deployments near Venezuelan waters “threaten regional peace and security” and violate international law. When the U.S. launched a second strike on a Venezuelan vessel the following day, Lin denounced the action as unilateral and urged Washington to respect Venezuela’s sovereignty and the Caribbean’s designation as a “zone of peace”.

November–December 2025: Operation Southern Spear and airspace tensions

As the U.S. announced Operation Southern Spear—an operation targeting the Venezuelan military and a U.S. designation of the Cartel de los Soles as a terrorist group—foreign ministry spokeswoman Mao Ning said China opposed “external forces interfering in Venezuela’s internal affairs under any pretext.” She called on Washington to stop unilateral actions, respect the sovereignty of Latin American states and honor the 2014 proclamation declaring the region a zone of peace. In early December, when U.S. officials suggested closing Venezuelan airspace to commercial flights, spokesman Lin Jian criticized the proposal as a colonialist threat reminiscent of the Monroe Doctrine. He argued that Washington’s rhetoric about “protection of the hemisphere” showed the United States still considered Latin America its backyard.

UN Security Council confrontation

On 24 December a U.N. Security Council meeting was convened after U.S. forces seized Venezuelan oil tankers. Chinese envoy Sun Lei accused Washington of violating international law and Venezuelan sovereignty, arguing that the U.S. justification of protecting hemispheric security was a revival of the Monroe Doctrine. An expert quoted by the Global Times said the seizure of oil tankers and talk of hemisphere protection were attempts to legitimize American hegemony.

January 2026: U.S. strikes and the capture of Maduro

Operation against Maduro

On 3 January 2026 U.S. forces conducted air strikes on Venezuelan sites and announced the capture of President Maduro. Chinese state media reacted with alarm. The foreign ministry said China was “deeply shocked” and “strongly condemns” the U.S. use of force, describing it as a hegemonic act that seriously violated international law and Venezuela’s sovereignty. In a formal statement, the ministry demanded that Washington abide by the U.N. Charter and stop interfering in other countries’ internal affairs. The Global Times repeatedly carried this condemnation and warned that the attack would destabilize the region and undermine the international order. Chinese officials also advised citizens to avoid travel to Venezuela due to “rising security risks”.

Chinese military analysts interviewed by state media argued that the U.S. strikes were unlawful and reflected Washington’s willingness to use force to achieve political ends. They highlighted that the operation revived the Monroe Doctrine and was driven partly by U.S. interest in Venezuelan oil. The analysts added that despite deploying elite Delta Force units, Washington had violated international norms and destabilized Latin America. State media also noted that some U.S. lawmakers criticized the operation for bypassing Congress and breaching international law.

Commentary emphasizing international law

Chinese newspapers framed the strikes as a stark example of who truly undermines international law. A People’s Daily commentary argued that the U.S. attack violated Article 2(4) of the U.N. Charter, which prohibits the threat or use of force against another state’s territorial integrity or political independence. It characterized the Monroe Doctrine as an outdated concept and urged the international community to oppose unilateralism and defend the sovereignty of all nations. Xinhua’s roundup of global reactions similarly quoted Chinese officials calling the strikes hegemonic and urging the U.S. to respect the U.N. Charter.

Analysis: subtext in China’s messaging

Chinese state media coverage of the Venezuelan crisis reveals several themes:

1. Defense of sovereignty and the U.N. Charter. Beijing consistently framed U.S. actions—from naval deployments to the January 2026 strikes—as violations of international law and Venezuelan sovereignty. The foreign ministry repeatedly invoked the U.N. Charter to legitimize its stance.

2. Critique of U.S. hegemony and revival of the Monroe Doctrine. Commentaries described U.S. rhetoric about “protecting the hemisphere” as a re‑packaging of the Monroe Doctrine—a symbol of colonialism. China’s narrative warns that Washington seeks to turn Latin America into its backyard, especially through control of oil resources.

3. Solidarity with the Global South. By congratulating Maduro and strengthening ties with Caracas, Beijing signals support for left‑leaning governments in the region. Chinese officials emphasize mutual respect and non‑interference, aligning with the rhetoric of a “zone of peace” in Latin America.

4. Warning to Chinese citizens. Alongside political commentary, the foreign ministry issued travel warnings and advised Chinese nationals to avoid Venezuela amid uncertainty. This shows that Beijing is preparing for potential crises while publicly supporting Caracas.

What to watch next

• International response to Maduro’s detention. Beijing will likely use multilateral forums to criticize U.S. unilateralism and support Venezuela’s call for Maduro’s release. The outcome may shape China’s engagement with regional organizations such as CELAC and the U.N. Human Rights Council.

• Energy and economic ties. Venezuela’s oil reserves are strategic. If Washington tightens sanctions, Beijing might increase financial and technical support to ensure access to crude oil, deepening the partnership forged in 2024.

• Implications for the Global South. The crisis is a test of China’s positioning as a champion of sovereignty and South–South cooperation. How Beijing navigates the crisis—balancing its principles against pragmatic interests—will send a signal to other Latin American states wary of U.S. intervention.

In short: China can’t do much immediately but it will look for a different recourse in another theatre in the future. Commentators online are drawing a parallel to Taiwan by saying that Trump and Xi have a tacit agreement to carve up the world — that’s far from true.

Washington just approved an $11 billion weapons sale to Taiwan and there are no signs that Trump is about to abandon Taiwan. On the contrary, Xi might be drawing a lesson that China may need to weaken Taiwan internally before using military force — just as Trump did in Venezuela. This is part of a plan Beijing has held for sometime now and there remain many challenges in trying to accomplish such a move. Taiwan is no Venezuela. Taipei is armed with U.S. weaponry and has a strong U.S. support in its immediate neighborhood.

Therefore, Beijing isn’t going to move on Taiwan just because of events in Venezuela.

Source: Taiwan Security Monitor

China’s People’s Liberation Army (PLA) closed out 2025 by staging the most extensive set of military drills yet around Taiwan. Dubbed “Justice Mission 2025,” the exercises followed an 11.1 billion USD U.S. arms package for Taiwan and aimed to demonstrate Beijing’s ability to cut the island off from outside support.

Taiwan’s Ministry of National Defense detected nearly 90 PLA aircraft, 14 military vessels, and 14 coast-guard ships operating around the island on the first day of the drills. The exercises were part of a series of Chinese war games that have grown progressively more sophisticated since 2022.

This newsletter breaks down what was new about the latest drills and which elements follow patterns from previous exercises. It concludes with a brief look at why these developments matter for regional security.

What Was New in 2025

The Justice Mission 2025 drills departed from earlier exercises in several notable ways.

Record coverage and encirclement zones

Beijing’s Eastern Theater Command designated seven maritime zones for live-fire drills, more than any previous exercise. These zones encircled Taiwan more tightly and extended into eastern waters, making the drills “the largest to date by total coverage.” Taiwan’s coast guard noted that 35 PLA aircraft crossed the Taiwan Strait’s median line and that Chinese coast-guard vessels circled the island, highlighting a push to normalize incursions into areas once considered off-limits. An article published by China’s Xinhua news agency called the maneuvers an “encirclement” designed to “press and contain separatist forces while denying access to external interference,” summarized as “sealing internally and blocking externally.” Previous PLA exercises were large but seldom attempted such a comprehensive blockade.

Targeting of ports and energy corridors

Propaganda posters released during the drills highlighted attacks on Keelung and Kaohsiung, Taiwan’s largest ports. State media emphasized that the exercises aimed to seal off vital deep-water ports. Videos also depicted precision strikes on simulated energy facilities and supply routes, accompanied by captions such as “control energy corridors, disrupt supply routes, block clandestine routes to docks.” The focus on chokepoints and energy infrastructure marked a shift from earlier drills that concentrated primarily on air and missile strikes.

Showcase of emerging technologies

The PLA released footage showing automated humanoid robots, swarms of micro-drones and weaponized robotic dogs attacking mock targets. This was the first time China publicly showcased such technologies in cross-strait exercises. The display underscored Beijing’s interest in unmanned systems as part of future amphibious assaults and psychological warfare.

Integration of civilian shipping

Chinese state television highlighted an “armada of civilian ships” mobilized to support amphibious operations, with ramps and open decks suitable for transporting vehicles. Previous exercises used military landing ships, but the incorporation of commercial vessels demonstrates how the PLA might augment lift capacity in a conflict.

Emphasis on multi-domain blockade and distant strikes The April 2025 “Strait Thunder 2025A” drills, a precursor to Justice Mission 2025, already tested long-range live-fire rocket drills in the East China Sea and involved the aircraft carrier Shandong. Justice Mission expanded on this by simulating precision strikes on ports and energy facilities and by rehearsing multi-dimensional blockade and control, including strikes beyond the Taiwan Strait and into the Western Pacific. Analysts noted that the drills blurred the line between routine training and preparation for an actual assault.

What Looked Familiar

Despite these innovations, many aspects of the 2025 exercises echoed earlier PLA war games.

Continuing blockade and encirclement scenarios

Since the August 2022 drills triggered by former U.S. House Speaker Nancy Pelosi’s visit, Beijing’s exercises have consistently practiced blockade tactics. In 2022 China fired conventional missiles near Taiwan and deployed more than 100 aircraft and 10 warships. The inaugural Joint Sword 2023 drills in April 2023 encircled Taiwan and simulated strikes on key nodes. Joint Sword 2024A in May 2024 integrated PLA Navy ships with the China Coast Guard, demonstrating gray-zone tactics that blur military and law-enforcement roles. Joint Sword 2024B in October 2024 continued the encirclement and notional blockade scenarios; the aircraft carrier Liaoning operated east of Taiwan while 153 PLA aviation sorties were recorded. These recurring blockade drills created the template on which Justice Mission 2025 built.

Use of Coast Guard and paramilitary forces

Joint Sword 2024A saw the integration of China Coast Guard vessels with PLA forces, enhancing maritime law-enforcement resources to support military objectives. Coast-guard ships circumnavigated Taiwan during the 2024B exercise in a heart-shaped route portrayed by Chinese media as a “patrol of love.” Justice Mission 2025 continued this pattern by deploying 14 coast-guard vessels alongside the PLA.

Cross-Strait “punishment” motif Beijing has repeatedly framed exercises as punitive responses to political events—Pelosi’s visit in 2022, President Lai Ching-te’s inauguration in May 2024 and his National Day speech in October 2024. The China–Taiwan Weekly Update by the Institute for the Study of War notes that these drills often coincide with U.S. arms sales or Taipei’s engagements abroad, and that China uses them to signal both deterrence and retaliation. Justice Mission 2025 followed the same motif; the drills began 11 days after Washington announced a record U.S.$11.1 billion arms package for Taiwan.

Unannounced precision strikes and median-line crossings

Long-range strikes and aggressive aircraft maneuvers have become routine. In April 2025, the PLA’s Strait Thunder 2025A drills launched rockets and practiced strikes on ports and energy facilities. During Justice Mission 2025, Taiwan recorded 35 PLA aircraft crossing the Taiwan Strait’s median line—a practice that started in 2022 and continued through the Joint Sword series. PLA vessels also operated inside Taiwan’s contiguous zone, part of a “creeping territorial encroachment” identified by analysts.

Where Do These Trends Lead?

Analysts observe an evolution from politically triggered displays toward a sustained military presence. The U.S. Air University notes that PLA incursions into Taiwan’s airspace and waters surged in early 2025 even without major political flashpoints, setting record highs in median-line crossings and warship activity. These incursions extend beyond the Strait into the Bashi Channel and the Western Pacific, underscoring a doctrinal focus on operational dominance and training rather than simple signaling. Combined with demonstrations of new technology and multi-domain blockade tactics, Justice Mission 2025 suggests that Beijing is rehearsing both the isolation of Taiwan and the interdiction of foreign intervention.

Key Exercises and Their Characteristics

The evolution of China’s military posture around Taiwan is illustrated through several major exercises conducted between 2022 and 2025.

• Pelosi-response Drills (August 2022): During these exercises, the PLA fired conventional ballistic missiles near Taiwan and established six distinct exercise zones involving over 100 aircraft and 10 warships. This marked the first large-scale encirclement since 1996 and established a new precedent by frequently crossing the Taiwan Strait’s median line.

• Joint Sword 2023 (April 2023): These drills focused on a symbolic encirclement of the island and simulated precision strikes on key operational nodes. The exercise reinforced a growing pattern of “punishment” drills launched in response to perceived political provocations.

• Joint Sword 2024A (May 2024): This iteration integrated the PLA Navy with the China Coast Guard to highlight gray-zone tactics and included operations near Taiwan’s offshore islands. While it continued previous blockade scenarios, it featured fewer aircraft than the 2023 drills and did not designate specific live-fire zones.

• Joint Sword 2024B (October 2024): The PLA utilized the aircraft carrier Liaoning and recorded 153 aviation sorties while coast-guard vessels performed a full circumnavigation of the island. The exercises moved closer to Taiwan’s contiguous zone, maintaining the encirclement motif as a political message tied to President Lai’s National Day speech.

• Strait Thunder 2025A (April 2025): These drills featured long-range live-fire rocket exercises in the East China Sea and specific targeting of ports and energy facilities using the aircraft carrier Shandong and YJ-21 air-launched ballistic missiles. Although no live fire was detected immediately near Taiwan, the exercise was a significant show of anti-access/area denial capabilities.

• Justice Mission 2025 (December 2025): Representing the largest drills by coverage to date, this exercise utilized seven encirclement zones and focused on sealing off ports and energy corridors. It was notable for showcasing advanced technology like humanoid robots and micro-drones while mobilizing civilian shipping, all while continuing the established motif of punitive blockade and integrated coast-guard presence.

Conclusion

China’s Justice Mission 2025 drills represent both continuity and evolution in the PLA’s approach to Taiwan. The exercise built on a decade of escalation that began with ballistic-missile salvos in 2022 and evolved through the Joint Sword series’ blockade rehearsals. Yet it added new dimensions—record geographical coverage, explicit targeting of ports and energy infrastructure, integration of civilian shipping and high-profile use of unmanned systems—that hint at Beijing’s broader ambitions. Together with the shift toward sustained military presence noted by analysts, these innovations suggest the PLA is not merely signaling displeasure but rehearsing operational capabilities to isolate Taiwan and deter external intervention.

For Taipei and its partners, the challenge now lies in countering not just isolated spikes of activity but a steady drumbeat of incursions and a growing portfolio of technologies that could complicate defense planning. Continued transparency, international engagement and development of asymmetric capabilities—such as long-range precision fires highlighted in Taiwan’s recent U.S. arms package—will be critical to preserving stability in the Taiwan Strait.

Clashes on the Thailand-Cambodia frontier

The simmering border conflict between Thailand and Cambodia again erupted despite diplomatic pressure. After more than two weeks of tit‑for‑tat shelling and accusations of chemical weapons use, Malaysia — as ASEAN chair — urged both sides to use this week’s emergency foreign‑minister summit in Kuala Lumpur to work out a ceasefire and “dialogue … based on mutual respect.” The Thai and Cambodian defense ministers agreed to meet on 24 Dec. at the border to discuss a truce; Thai Foreign Minister Sihasak Phuangketkeow said the goal was a “true” ceasefire with commitments and implementation plans. In Phnom Penh, officials accused Thailand of deploying F‑16 jets and “toxic gas”, while Bangkok said its actions were defensive. The crisis will test ASEAN’s ability to enforce peace among its members.

Taipei shaken by rare mass-casualty knife attack

Taipei was jolted late last week by one of the deadliest acts of violence the island has seen in years. A 27-year-old man carried out a knife and smoke-grenade attack around Taipei Main Station and nearby shopping districts, killing at least four people and injuring several others before dying during a police chase. Authorities say the suspect had a prior criminal record and had previously served as a military volunteer, though the motive remains unclear.

The attack has struck a nerve in a society where violent crime is rare and public transport is generally seen as safe. President Lai Ching-te ordered heightened security nationwide, while police presence was visibly increased at major transit hubs. Beyond the immediate security response, the incident has sparked a wider debate in Taiwan about mental health screening, access to replica military equipment sold online, and how authorities should balance openness with public safety — an uncomfortable conversation for a democracy that prides itself on both.

Rule of law under scrutiny

• Malaysia: Former prime minister Najib Razak’s attempt to serve his corruption sentence under house arrest was rejected by a Kuala Lumpur court. The judge ruled that although an “addendum order” existed, the monarch’s instruction was not valid because it hadn’t been vetted by the pardons board. Najib, jailed since 2022 for graft, will appeal; the court’s decision comes just days before he faces verdicts in his largest 1MDB trial. The verdict has reignited tensions within Prime Minister Anwar Ibrahim’s coalition, where Najib’s party UMNO remains influential.

• Pakistan: A special court sentenced former prime minister Imran Khan and his wife Bushra Bibi to 17 years in prison for illegally purchasing and selling state gifts, including watches given by Saudi Crown Prince Mohammed bin Salman. The pair, already serving sentences for separate corruption cases, were convicted of betraying public trust and money‑laundering. Khan’s party called the verdict politically motivated and plans to appeal.

• Bangladesh: Tens of thousands attended a state funeral in Dhaka for Sharif Osman Hadi, a 32‑year‑old youth leader who was shot in the head while launching his parliamentary campaign. Hadi, a key figure in the student‑led uprising that toppled Sheikh Hasina last year, died in Singapore after six days on life support. Interim leader Muhammad Yunus promised to uphold his ideals and called for calm. Rights groups warned that the murder and subsequent mob attacks on newspapers and cultural institutions could undermine Bangladesh’s fragile transition ahead of February’s general election.

Diplomatic dance: balancing allies and rivals

• South Korea: Seoul has restored its North Korea Strategy Division — now renamed the North Korea Policy Division — to emphasize dialogue and confidence‑building with Pyongyang. The defense ministry will also resurrect a deputy minister’s position to oversee artificial‑intelligence projects in the military. Separately, South Korea quietly sent a senior diplomat to Moscow to discuss North Korea’s nuclear programme with Russia’s envoy; Seoul urged Russia to help curb Pyongyang’s weapons and raised concerns about Moscow–Pyongyang military cooperation. On the domestic front, newly elected President Lee Jae Myung is moving the presidential office back to the historic Blue House compound, reversing his predecessor’s relocation to the defense ministry complex. The move is slated for completion by Christmas.

• Japan and China: U.S. Secretary of State Marco Rubio (under President Donald Trump) visited Tokyo and emphasized that Washington could maintain its “strong partnership with Japan” while finding ways to work with China on global challenges. The message was intended to reassure allies and ease Chinese fears that the United States is assembling a containment bloc. Beijing, meanwhile, protested after a senior Japanese ruling‑party official visited Taiwan. China’s foreign ministry insisted that Tokyo should “reflect on its mistake”, while Taiwan’s President Lai Ching‑te urged deeper cooperation with Japan and called for democracies to stand together.

• Iraq–Pakistan: President Asif Ali Zardari paid his first visit to Baghdad in decades, meeting Iraqi President Abdul Latif Rashid. Both leaders committed to expanding trade, investment, agriculture, defense production and IT cooperation. Zardari pitched direct banking links and easier visas to facilitate pilgrimages for Pakistani Shiites and pledged joint efforts against extremism and narco‑trafficking.

Trade winds and economic shifts

• New FTAs: New Zealand and India concluded a landmark free‑trade agreement eliminating or reducing tariffs on 95 % of New Zealand’s exports to India; in return, Indian goods will receive duty‑free access to New Zealand. Wellington also pledged to invest US$20 billion in India. The deal excludes Indian dairy to protect farmers but could double bilateral trade when signed in early 2026. Critics in New Zealand’s coalition government worry it gives too much away, while business leaders hail the opportunity.

• Indonesia’s flurry of deals: Jakarta signed a free‑trade agreement with the Russian‑led Eurasian Economic Union (EAEU), gaining preferential tariffs on 90.5 % of goods traded with the bloc and access to a 180‑million‑person market. The deal is expected to boost exports of palm oil, footwear, textiles and electronics. Separately, Indonesia’s coordinating economy minister Airlangga Hartarto flew to the United States to finalize a reciprocal trade agreement aimed at lowering tariffs on Indonesian products; officials hope to conclude the negotiations within weeks.

• Tit‑for‑tat tariffs: China responded to the EU’s investigation of Chinese electric vehicles by imposing provisional 21.9 %–42.7 % duties on European dairy products like French Roquefort cheese. Beijing’s commerce ministry said EU subsidies were hurting Chinese dairy farmers and added that the tariffs could be revised later. Analysts saw the move as retaliation in an escalating trade dispute.

• Corporate diplomacy: Apple’s chief operating officer Sabih Khan met China’s vice‑commerce minister Li Chenggang in Beijing. Li promised that China would offer “greater opportunities” to foreign firms and urged Apple to deepen partnerships with Chinese suppliers.

• Climate litigation: In a rare trans‑national climate case, a court in Zug, Switzerland agreed to hear a complaint brought by residents of Pulau Pari, a low‑lying Indonesian island frequently flooded by rising seas. The islanders argue that Swiss cement giant Holcim is failing to cut carbon emissions and seek compensation for climate‑change damage. The case could set a precedent for holding companies accountable for emissions impacting vulnerable communities.

• Japan’s nuclear comeback: Niigata prefecture’s assembly voted to restart the Kashiwazaki‑Kariwa nuclear plant, the world’s largest, which has been idle since the 2011 Fukushima disaster. The vote effectively clears the way for Tokyo Electric Power Company (TEPCO) to bring one reactor online next year and another around 2030. Governor Hideyo Hanazumi called the restart a milestone but noted there is “no end” to ensuring safety. The move forms part of Prime Minister Sanae Takaichi’s plan to double nuclear’s share of Japan’s energy mix by 2040, though local protests underscore lingering trauma from Fukushima.

In brief

• Vietnam’s leadership race: Vietnam’s Communist Party will convene its quinquennial congress from January 19–25. Around 1,600 delegates will select a roughly 200‑member Central Committee, which then elects the Politburo and general secretary. Current party chief To Lam, who took power after Nguyen Phu Trong’s death, is seeking a second term after expanding police powers during his brief tenure. Vietnam aims for annual GDP growth of at least 10 % in 2026–30 and wants to reduce reliance on foreign investment while fostering “national champion” firms.

• South China Sea dairy: Beijing’s state‑owned CNOOC reportedly began production at a new offshore oil project in the South China Sea (details are scarce due to paywall restrictions), underscoring China’s push for energy self‑sufficiency and strategic control over contested waters.

• Taiwan security: After a deadly mass stabbing in Taipei on Dec 19 that killed at least four and injured several others, President Lai Ching‑te vowed a tough response and ordered heightened security. The attacker, a 27‑year‑old former air force volunteer, used smoke grenades and knives in crowded metro stations; he died after falling during a police chase. Violent crime is rare in Taiwan, and the incident shocked the island.

This week in Asia, Washington delivered its clearest deterrence signal yet to Beijing, pushing ahead with a record $11.1 billion arms package for Taiwan as China stepped up pressure across the Taiwan Strait. Elsewhere in the region, fighting reignited along the Thailand–Cambodia border, triggering mass displacement and chemical-weapons accusations, while China’s economy showed fresh signs of strain even as Beijing quietly pressed ahead with its drive for semiconductor self-sufficiency.

U.S. Pushes Ahead With Record $11.1bn Arms Sale to Taiwan

Washington is moving ahead with an $11.1 billion arms package for Taiwan, the largest U.S. weapons sale ever approved for the island. Taiwan’s defense ministry confirmed the deal on Thursday, saying it has entered the Congressional notification phase. It’s also the second Taiwan arms sale under Donald Trump’s current administration, signalling that U.S. security support for Taipei remains firmly on track despite rising pressure from Beijing.

The package includes HIMARS rocket systems, howitzers, anti-tank missiles, drones, and spare parts, all aligned with Taiwan’s push toward asymmetric warfare—mobile, survivable systems designed to deter a much larger PLA force. Taipei framed the sale as critical to building credible deterrence and maintaining stability in the Taiwan Strait.

The timing matters. China has stepped up military and diplomatic coercion against Taiwan, even as Washington balances formal ties with Beijing and its legal obligation to help Taiwan defend itself. Despite regional anxieties over Trump’s deal-driven style and a planned Xi–Trump meeting next year, U.S. officials have made clear they intend to ramp up arms sales beyond Trump’s first term. For now, this package sends a clear message: deterrence, not retreat, remains U.S. policy on Taiwan.

The proposed sale encompasses a diverse range of long-range strike capabilities, precision firepower, and sustainment—squarely aligned with Taiwan’s asymmetric defense items include:

• 82 HIMARS launchers and 420 ATACMS missiles, bundled in a package worth over $4 billion, giving Taiwan a significant boost in long-range, mobile strike capability.

• 60 self-propelled howitzer systems and related equipment, valued at more than $4 billion, strengthening artillery firepower and survivability.

• Unmanned aerial vehicle (UAV) systems, valued at over $1 billion, expanding ISR and strike options.

• Military software worth more than $1 billion, supporting command, control, and battlefield integration.

• Javelin and TOW anti-tank missiles, combined value of over $700 million, reinforcing close-range and coastal defense.

• Helicopter spare parts worth $96 million, aimed at improving readiness and sustainment.

• Refurbishment kits for Harpoon anti-ship missiles, valued at $91 million, extending the life of existing coastal defense assets.

Escalation on the Thailand–Cambodia Border

• Heavy clashes renew displacement and casualties. Fighting between Thai forces and Cambodian troops along the border intensified, breaking an earlier cease‑fire. Reuters reports that by 14 Dec the conflict had killed around 40 people and displaced more than 500 000 civilians. Thailand’s caretaker prime minister, Anutin Charnvirakul, vowed to continue combat operations even as former U.S. President Trump claimed to have brokered a ceasefire. Cambodia accused Thailand of using rockets and claimed Thai F‑16s struck coastal areas, while Thai officials countered that Cambodian forces fired first and used rockets near Thai villages.

• Humanitarian and economic fallout: Thailand closed its main border crossing at Chong Mek, leaving about 6 000 Thai citizens stranded in Cambodia. The government explored halting fuel exports to Cambodia to prevent supplies from being diverted to the Cambodian military. Southeast Asian foreign ministers planned emergency talks to negotiate a cease‑fire.

• Chemical‑weapons accusations: Cambodian soldiers complained of respiratory problems after Thai aircraft allegedly dispersed “toxic gas.” Cambodia accused Thailand of using chemical weapons, but Thai officials dismissed the claims as fake news. Cambodia previously accused Thailand of employing white phosphorus; exposure to those fumes can severely damage respiratory tracts.

China’s Economic Headwinds and Semiconductor Drive

• China’s economy softened in November: industrial output growth fell to a 15‑month low and retail sales growth slowed to the weakest pace since 2022, reflecting fading consumer subsidies and the property crisis. The property sector, which accounts for about 70 % of household wealth, continued to decline with investment down 15.9 % year‑on‑year. International bodies, including the IMF, urged Beijing to implement structural reforms and resolve the property debt overhang.

• Youth unemployment remained high: China’s jobless rate for 16‑ to 24‑year‑olds was 16.9 % in November, while unemployment among 25‑ to 29‑year‑olds was 7.2 %.

• A Reuters investigation revealed that Chinese engineers have assembled a prototype extreme‑ultraviolet (EUV) lithography machine in Shenzhen. Built from salvage parts and taking up an entire factory floor, the prototype has not yet produced chips but generates EUV light and demonstrates Beijing’s drive to achieve chip self‑sufficiency by 2028–2030. EUV machines, currently monopolized by ASML, are essential for manufacturing cutting‑edge semiconductors, and Washington’s export controls aim to restrict China’s access.

Reads:

How China Wins the Future — Elizabeth Economy

Dispatch from New Delhi: Another India-China flare-up is coming — Michael Kugelman and Srujan Palkar

China’s dispute with India over Arunachal Pradesh — Victoria Jones