Welcome to your essential roundup of the day’s pivotal developments shaping Asia’s geopolitical, defense, and economic landscapes. Over the last 24 hours, signs of thawing India–China ties, escalating US–China frictions, and persistent oil market jitters highlighted the region’s shifting balance. From renewed air links to missile shields and cyber drills, here’s what you need to know.
Geopolitics
India and China to Resume Direct Flights After Five-Year Freeze
India and China will restart direct commercial flights by late October, ending a suspension that began with the pandemic and deepened after the 2020 border clashes. IndiGo will launch daily Kolkata–Guangzhou services on October 26, with Delhi–Guangzhou expected soon after. Air India is also preparing routes. The move follows trade talks earlier this year, signaling tentative warming despite ongoing strategic rivalry.
Despite the planned resumption of flights, I haven’t seen any major traffic from China to India as the issuance of visas to Chinese nationals has been slow. Meanwhile, there are loads of Indian tourists traveling to China who will benefit from the flights restarting.
US Dismisses Beijing’s Warning to Hong Kong Consul General
The US brushed aside China’s formal warning to its consul general in Hong Kong, intensifying tensions ahead of a planned Trump–Xi summit later this month. Washington framed the move as routine diplomacy, while Beijing views it as interference in Hong Kong’s autonomy—another flashpoint in already strained ties.
Oil Prices Swing on OPEC+, China Stockpiling, and Geopolitics
Crude oil markets face a “triple whammy” of volatility: OPEC+ has only partially unwound its 2.2 million bpd cuts (about 500,000 bpd withheld), China is quietly stockpiling at least 500,000 bpd to steady Brent at $65–70, and geopolitical shocks—from Middle East tensions to Ukraine’s strikes on Russian refineries—add fuel. For Asia’s top importers, the mix cushions downside risks but keeps markets jittery, especially if US–China trade spats squeeze Russian flows to India and Japan.
Defense
Australia and Papua New Guinea Seal Mutual Defense Pact
Australia and PNG signed a landmark treaty on October 2, creating full mutual defense obligations and elevating their security partnership. The agreement, delayed from earlier deadlines, reflects growing alarm over China’s military reach in the Pacific and sets a precedent for tighter regional security coordination.
Australia and PNG have agreed to a mutual defense treaty which means Papua will need to supply troops for Canberra’s defense during a conflict. Beijing has been put on notice.
China Deploys Prototype ‘Golden Dome’ Missile Shield
China has fielded a working prototype of its “Golden Dome” missile defense system, capable of tracking up to 1,000 launches worldwide in real time. Built by the Nanjing Research Institute, the system integrates long-range radars (up to 4,000 km) and kinetic interceptors to defend key hubs like Beijing. This leap ahead of the US’s still-conceptual Golden Dome intensifies strategic competition and raises nuclear stability concerns. Currently, there is no official confirmation regarding the deployment of a “Golden Dome”-like system in China. This story was reported by Stephen Chen at SCMP, who has a track record of exaggerating scientific research.
Japan Leads Cyber Defense Drills with Pacific Islands
Japan opened a six-day cyberdefense exercise on October 3 involving 30 experts from 14 Pacific island nations. Using its “Recurrence” framework, teams practiced spotting ransomware attacks, tracing origins, and mitigating damage. With US agencies contributing, the exercise highlights Tokyo’s growing role in cyber capacity-building across the Pacific.
India Bars Pakistan, China from UN Peacekeeping Conclave
India will exclude Pakistan and China from its October 14–16 UN peacekeeping army chiefs’ conclave in New Delhi, citing strained ties. The meeting, with over 30 participants, will highlight India’s peacekeeping record—290,000 personnel deployed since the 1950s and 182 fatalities—the largest contribution by any nation.
Economy
Taiwan Rejects U.S. ‘50-50’ Chip Proposal, Focus Stays on Tariffs
Taiwan firmly rejected a U.S. pitch to shift half of its semiconductor production onto American soil, with Vice Premier and chief negotiator Cheng Li-chiun stressing the idea was “not even discussed” during recent trade talks in Washington. The talks instead focused on tariff cuts and exemptions from “stacked” duties, with Taipei pushing to ease the current 20% reciprocal rate on its exports.
The proposal—floated by Commerce Secretary Howard Lutnick—envisioned a 50-50 production split to reduce U.S. reliance on Taiwan, which currently supplies about 95% of America’s advanced chips. Taiwanese politicians blasted the plan as a threat to the island’s “Silicon Shield,” the notion that its dominance in chipmaking deters Chinese military action. Kuomintang leader Eric Chu called the proposal “exploitation and plunder,” while Taiwan People’s Party chair Huang Kuo-chang said it would “hollow out” the nation’s tech sector.
President Trump has also accused Taiwan of “stealing” U.S. chip business, underscoring how semiconductors have become central to Washington’s trade and security agenda. For Taipei, holding firm on chips while pushing for tariff relief reflects both economic priorities and its determination to guard a key pillar of national defense.
Now, Scott Bessent has suggested a “big breakthrough” during the pull-aside meeting at the APEC in South Korea from Oct. 31 to Nov. 1. We have also heard rumors about Xi Jinping expecting to extract a deal from the U.S. over the question of “Taiwan independence.” WSJ’s Lingling Wei reported the story earlier last week citing sources, while saying Xi wants U.S. to commit to opposing the idea of “Taiwan independence” and end its long held policy of political ambiguity. We will keep watching what happens at the APEC.
Asian Equities Rally on Fed Cut Bets and AI Momentum
Asian markets are headed for their strongest week since May, with MSCI’s Asia-Pacific index up more than 2%. Optimism is driven by expectations of near-term Fed rate cuts, outweighing US government shutdown fears. Japan’s Nikkei rose 0.75% toward record highs, while thin holiday trading muted China’s moves. The dollar’s dip lifted the yen in its sharpest weekly surge in months, while gold steadied near recent peaks on the low-rate outlook.
Thank your for reading!