THE NAVIGATOR
DECEMBER 2024
WINDS OF CHANGE ACROSS THE INDO-PACIFIC
By Dr Manali Kumar, Editor-in-Chief at 9DASHLINE
Welcome to the December edition of The Navigator—9DASHLINE’s flagship newsletter, offering expert insights into the key developments shaping the Indo-Pacific. As the year comes to a close, the Indo-Pacific continues to witness dynamic shifts across the political, economic, and strategic landscapes. From a sudden and rather bizarre political crisis in South Korea to persistent concerns about the economic trajectory of several regional heavyweights like China, Japan, and India—the trends shaping the Indo-Pacific will have global implications.
This month's brief explores how China may be attempting to connect disputes in the South China Sea with its declared objective of reunification with Taiwan. Developments across the Indo-Pacific suggest a region at a crossroads, with significant transformations underway. South Asia continues to grapple with shifting political landscapes, as Bangladesh’s interim government led by Dr Muhammad Yunus attempts to stabilise the domestic situation and Sri Lanka charts its course of post-Rajapaksa recovery. Meanwhile, Southeast Asia faces the persistent challenges of Myanmar’s deepening humanitarian crisis, alongside strategic recalibrations in the Philippines’ maritime policies. East Asia is navigating a mix of internal economic uncertainties in China and significant political turbulence in Taiwan and South Korea, all with implications for broader regional stability.
We are also delighted to share the latest episode of our podcast THE BRIDGE, produced in collaboration with the European Parliament in ASEAN.
Listen in as David MacSweeney, the founder of 9DASHLINE, and I join Zsuzsa Anna Ferenczy and Richard Heydarian to discuss some of the trends and developments we will be watching heading into 2025.
The Indo-Pacific is a region in flux, with political and economic developments revealing a landscape in the throes of transformation. Yet, as 2025 approaches, the ultimate shape of these changes remains uncertain, leaving much to be observed in the year ahead. We’ll be following these developments closely. Stay tuned to The Navigator for expert analysis and in-depth coverage to keep you ahead in understanding the region's dynamic developments.
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BEIJING’S SCARBOROUGH SHOAL MOVE SIGNALS GROWING THREAT TO TAIWAN
By David MacSweeney, Founder at 9DASHLINE
In November, while much of the world’s attention was focused on the US election, China quietly submitted a statement and nautical charts to the United Nations, declaring baselines around the strategically important Scarborough Shoal in the South China Sea (SCS) in a further attempt to legitimise its claim. The move, targeting a feature just 125 nautical miles from Manila's coast, was widely seen as a direct challenge to the Philippines, which had earlier passed two laws defining its maritime claims.
China’s declaration of baselines has implications beyond the frequent discussions of untapped oil and gas resources in the SCS, with direct consequences for Taiwan’s security. Concerns are growing that Beijing is attempting to link sovereignty over the SCS with its broader objectives regarding Taiwan.
For years, Scarborough Shoal has been at the centre of a high-stakes standoff between China and the Philippines. Analysts have long feared that the shoal could become yet another focal point in China’s strategy of transforming underwater features into key military assets. Beijing has already demonstrated this capability at Mischief Reef, Fiery Cross Reef, and other locations, rapidly transforming features into military outposts equipped with radar systems, aircraft, and other strategic infrastructure.
Taiwan’s Foreign Minister Joseph Wu, and US intelligence have long warned that China may be preparing for a potential conflict with Taiwan by 2027. Control of the SCS, including Scarborough Shoal, could be crucial for China in further limiting Taiwan’s trade and defence options. Should this occur, control of the SCS would be vital for Beijing, allowing it to dominate waters essential for supporting or defending against an invasion scenario.
Meanwhile, concerns are mounting over the incoming Trump administration’s appetite to aid Taiwan in the event of an invasion. President-elect Trump’s stance on Taiwan remains uncertain, driven by his unpredictable nature, doubts about his grasp of critical details, and a perception that he may believe Taiwan has “stolen” much of the US chip industry.
These concerns are heightened by the influence of key advisor Elon Musk, who has described Taiwan as an “integral part of China”, comparing its status to Hawaii’s position within the United States, and suggesting Taiwan should accept “special administrative zone” status similar to Hong Kong. Musk's lack of nuance on matters of identity and sovereignty, along with his expanding influence within the administration, is fuelling concern regarding the nature of advice Trump may depend on in the event of a Taiwan contingency. The recent appointment of Elbridge Colby as Undersecretary of Defense for Policy may offer some reassurance, given his strong advocacy for continued US engagement in Asia. However, Musk currently appears to have Trump’s ear across a range of critical issues.
The 2014 Enhanced Defence Cooperation Agreement grants the US access to nine military bases in the Philippines, making Manila a key player in any invasion scenario due to its proximity to Taiwan. If Scarborough Shoal were to undergo a rapid transformation and integrate with other fortified features in the South China Sea, it could complicate or delay a US response to any invasion of Taiwan, where time would prove critical in preventing China from gaining a foothold on the island.
Doubts about the US commitment to the region persist, including concerns over its willingness to defend the Philippines, despite the US-Philippines Mutual Defense Treaty. Any failure to act decisively could embolden China, damaging the region’s security architecture and the credibility of US commitments to its allies. Trump’s previous demand that South Korea pay more for security, along with his transactional approach, is heightening these concerns.
China may be calculating that a Trump-led US may lack the political will to counter its increasingly bold moves as part of its salami-slicing strategy. If so, any development of Scarborough Shoal would represent a significant step in China’s effort to challenge the US, through a material loss to the Philippines and substantial damage to the US’s reputation across the region.
China’s advanced missile capabilities, round-the-clock shipbuilding program (reportedly more than 232 times greater than the US), and economic weight could give Beijing just enough leverage to persuade Trump not to commit US forces to developments he might view as inconsistent with his more isolationist, ‘America First’ world view.
In exchange, China could offer a major deal—potentially involving North Korea, Russia, or Ukraine. Beijing has a history of testing US presidents early in their tenure, and with so many regions in flux, Xi Jinping may feel the moment is ripe for deal-making.
ACROSS THE INDO-PACIFIC
South Asia
2024 was a year of domestic political churn in South Asia and geopolitical hedging in the Sino-Indian contest. A popular student protest in Bangladesh turned into a mass movement to remove Sheikh Hasina from power. Muhammad Yunus, the advisor to the interim government, has announced that elections will likely be held towards the end of 2025. Pakistan PM Shehbaz Sharif is failing to secure popular legitimacy as protests demanding former PM Imran Khan’s release are growing stronger; in parallel the unrest in Balochistan has thrown a spanner in China’s projects in Pakistan. And while the BJP and Narendra Modi were able to form a government for a third consecutive term, their failure to secure a full majority gives hope for reviving parliamentary democracy in India. In Sri Lanka, the people’s angst against the Rajapaksas culminated in the election of Dissanayake as President, the first from the Marxist outfit JVP. Amidst the various power shake-ups, minorities in South Asia continue to suffer and refugees like Afghans and Rohingyas remain easy political targets.
Nepal’s Prime Minister, KP Sharma Oli, travelled to China on his first official visit. Among several agreements related to infrastructure and trade that were signed, a framework for BRI projects and their financing mechanisms was key. Despite Nepal’s participation in BRI since 2017, projects have failed to take off largely due to a lack of domestic consensus over the consequences of Chinese debts. Oli’s decision to travel to Beijing instead of Delhi and sign the framework reflects a definite tilt in the South Asian strategic chessboard.
India’s envoy to Dhaka was summoned after a far-right group attacked the Bangladesh High Commission in Agartala over attacks against the Hindu minority under the Yunus regime. Amidst the tension, Indian Foreign Secretary Vikram Misri, also met Chief Advisor Yunus to discuss issues related to border security and promote cooperation through BIMSTEC. Delhi-Dhaka relations continue to remain tense since the fall of Sheikh Hasina’s government but they have been further aggravated due to the mutual politicisation over the treatment of minorities. New Delhi is also yet to decide on Bangladesh’s official request for Sheikh Hasina’s extradition.
Sri Lanka’s new President, Anura Kumara Dissanayake, met Prime Minister Modi in Delhi on his first official visit. He thanked India for the assistance it provided during the financial crisis and announced plans to develop interconnected power grids and joint petroleum pipelines. However, Dissanayake’s next destination is China in January. Maldivian Airlines has also increased direct flights to China, seemingly to compensate for declining Indian tourists. Smaller states in the region will continue to hedge and engage to find space for themselves in the Sino-Indian contest.
Southeast Asia
The United Nations projects that Myanmar's internally displaced population will surge by 30 per cent, reaching 4.5 million in 2025 due to escalating conflict. A new wave of fighting, which began in October 2023, has intensified violence, forcing civilians to flee their homes. The number of displaced has risen steadily since the 2021 military coup. The United Nations Office for the Coordination of Humanitarian Affairs estimates that nearly 20 million people, a third of Myanmar's population, will need humanitarian aid in 2025. The United Nations has urged countries to provide USD 1.1 billion in assistance.
Philippine President Ferdinand Marcos Jr. confirmed that the country's resupply missions to its South China Sea outposts will continue despite rising tensions with China. After Chinese Coast Guard vessels disrupted a resupply mission, Marcos emphasised that the Philippines would not escalate the situation, stating that the country is merely protecting its territorial rights. He rejected calls to send warships, instead promoting coast guard diplomacy and strategic thinking to safeguard maritime security without destabilising the region.
This year, Southeast Asia has seen momentous change and transition. Two of the most important countries, Vietnam and Indonesia, have welcomed new presidents to lead their respective countries. These new leaders will have to balance competing pressures from the United States and China while pursuing their countries' national interests. Meanwhile, the Philippines has moved much closer to the United States and other U.S.-aligned states as China has escalated tactics over disputed claims in the South China Sea. Whether China will adopt a new approach toward the Philippines in 2025 will determine the relationship's future.
In Myanmar, the Junta has failed to secure a decisive victory over the resistance forces and has lost ground in some areas. The prolonged conflict has eroded support for the Junta and exasperated suffering for the people caught in the middle. Finally, with the global revolution in artificial intelligence, Southeast Asian countries have been uniquely positioned to benefit. As companies look to expand AI infrastructure like cloud services and data centres, Southeast Asian countries have become increasingly desirable destinations due to cheaper expenses and optimal locations in the Pacific. As Southeast Asia enters 2025, these trends are likely only to accelerate.
East Asia
The latest economic data from China suggests the world’s second-biggest economy is in trouble. Brad Setser has an informative thread on X about the macroeconomic data suggesting a sharp deceleration in the economy. Lynette H. Ong, Senior Fellow at the Asia Society, wrote this month about depression in China, with many Chinese voting with their feet—“Xi’s “China Dream” Proves a Hard Sell”. In her latest blog, Lingling Wei of the Wall Street Journal writes that recent trading in the country’s bond market suggests China is in a depression, raising serious questions about the sustainability of China’s economic model, especially with potential tariffs on Chinese exports when President-elect Trump returns to the White House.
Taiwan’s divided politics continues to affect its defence and security policies, bringing unpredictability to its foreign policy. This month, KMT legislators, sceptical about the financial and strategic prudence of committing USD 10 billion to fund a domestic submarine program not expected to be completed until 2038, threatened to cut its budget entirely. KMT legislators have also proposed amendments to exclude military operations support from the scope of civilian defence efforts, which would seriously hobble President Lai Ching-te’s whole-of-society civilian defence reforms.
South Korean (ROK) President Yoon Suk Yeol’s botched attempt at imposing martial law has not only resulted in his impeachment, but signs are that the turmoil will affect the South Korea-Japan-US trilateral. The content of the impeachment motion reads as follows: “Under the guise of so-called ‘value diplomacy’, Yoon has neglected geopolitical balance, antagonizing North Korea, China, and Russia, adhering to a bizarre Japan-centered foreign policy, and appointing pro-Japan individuals to key government positions”. This part suggests that, if elected, an opposition Democratic Party-controlled presidency could be significantly different to Yoon’s. However, some analysts still believe that the “strategic imperatives” behind the Japan-ROK-US alliance would outweigh South Korea’s polarised politics.
With turmoil in South Korea, instability in Japan, divisions in Taiwan, Beijing’s economic challenges, and the incoming Trump administration likely to take a more transactional approach to the region, 2025 is likely to see more uncertainty and less allied cooperation as under the Biden administration.
The Pacific
The Indo-Pacific region remained a geopolitical hotspot through much of 2024 as nations navigated strategic alliances, leadership changes, and regional security dynamics amid intensifying competition among major powers. Local and global actors pursued initiatives to bolster influence, secure partnerships, and address shared challenges.
In December, Australia deepened its engagement with Pacific neighbours, most recently through a 10-year, A$600 million investment to establish a Papua New Guinea (PNG) rugby league team by 2028. This "rugby diplomacy" complements a broader bilateral security agreement positioning Australia as PNG’s key security partner while countering China's influence. Similarly, Australia forged an economic and security pact with Nauru, which includes veto rights over pacts with third nations including China.
In the wider Pacific, leadership transitions and pressing issues shaped the region's narrative. Tonga elected 'Aisake Valu Eke as Prime Minister following the resignation of Siaosi Sovaleni amid tensions. Eke, a seasoned politician, takes the helm as Tonga prepares for general elections in 2025. Vanuatu is grappling with the aftermath of a devastating 7.3 magnitude earthquake, prompting China to dispatch an engineering team for disaster relief—a first in its humanitarian engagement with Pacific nations.
New Zealand maintains its cautious stance on space security, remaining non-committal about joining an international space network. In a separate development, New Zealand has declined a proposal from the Cook Islands to introduce a separate passport for Cook Islands citizens, which would have allowed them to maintain their New Zealand citizenship. The ongoing political crisis in New Caledonia has resulted in a one-third cut to the French government's € 231 million emergency aid package for the territory.
Major powers continued to shape the region's security landscape. In Guam, the United States successfully conducted an interception test involving advanced radar systems, arresting seven Chinese nationals for trespassing in restricted areas. Fiji’s Defence Minister, Pio Tikoduadua, expressed concerns over a recent Chinese missile test, telling journalists that the Pacific is ‘not a space for missile testing’. The European Union also stepped up its regional presence, with its Ambassador to the Marshall Islands presenting credentials, signalling the EU’s commitment to Pacific stability and development.
On the climate front, Palau’s President has invited President-elect Trump to witness firsthand the impacts of the climate crisis, a move reflecting Pacific nations’ proactive climate diplomacy. This comes alongside ongoing efforts to raise global awareness of their disproportionate vulnerability to climate change.
THE BEST OF 9DASHLINE
This month, we highlight some of 9DASHLINE's most thought-provoking articles published this year that delve into key emerging geopolitical trends in the Indo-Pacific.
WHAT MULTIPOLAR WORLD ORDER AND FOR WHOM?
This year, the global consensus that the international order is shifting towards multipolarity became stronger. Yet, what will this multipolar order look like and what will this mean for global governance?
Dr Felix Heiduk (Head of the Asia Research Division, Stiftung Wissenschaft und Politik) and Dr Johannes Thimm (Deputy Head of the Americas Research Division, Stiftung Wissenschaft und Politik) explore these issues in this insightful article.
THE JAPANESE YEN IN A TURBULENT GLOBAL ECONOMY
The Japanese economy has had a turbulent year, with mixed signals about its recovery and inflation trajectory. Core inflation in Tokyo accelerated in December, driven by higher utility and food prices, suggesting progress towards the Bank of Japan's 2 per cent inflation target. However, weak factory output in November and limited signs of strong demand-driven inflation highlight underlying economic fragility. While the BOJ is expected to raise interest rates in the near term, uncertainties about wage growth and external demand could delay its timing.
In this insightful article published earlier this year, Dr Seohee Park (Lecturer, Ritsumeikan Asia Pacific University) explains the geoeconomic implications of currency fluctuations and their broader role in shaping Japan's international strategy. The yen's volatility underscores the challenges Japan faces in balancing domestic economic recovery, international competitiveness, and geoeconomic strategy.
CHINA’S GLOBAL SECURITY BLUEPRINT — IMPLICATIONS FOR WESTERN SECURITY AGENCY
China is asserting a more significant role in global security through its Global Security Initiative (GSI), which emphasises sovereignty, common security, and development over interventionism and liberal values.
In this article, Bernardo Mariani (Consultant, Peace and Conflict Resolution Evidence Platform) explains the GSI’s appeal for the Global South and argues that while China seeks to reform rather than overthrow the current system, its success will depend on its ability to deliver on its commitments, navigate Sino-US relations, and gain credibility as a global peacebuilder amid mounting geopolitical tensions.
AS THE PHILIPPINES’ ‘AGENCY’ IN THE WEST PHILIPPINE SEA RISES, SO TOO DOES ITS INFRASTRUCTURE DEVELOPMENT
In recent years, the Philippines has asserted itself as a middle power, adopting innovative measures to counter China’s actions in the West Philippine Sea.
Here, Joshua Bernard Espeña (Vice President, International Development and Security Cooperation) analyses this growing geostrategic agency, which is supported by the Marcos Jr. government’s National Security Policy and prioritises national sovereignty and infrastructure investment in the region, despite China’s opposition and domestic political challenges from pro-China factions led by former President Duterte. He argues that moving forward, the Philippines will aim to strengthen its capabilities across multiple domains, emphasising dual-use infrastructure and strategic alignment to navigate regional tensions effectively.
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The Navigator is produced by:
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