THE NAVIGATOR
FEBRUARY 2025
HIGH STAKES: ASIA’S SHIFTING GEOPOLITICS
By Dr Manali Kumar, Editor-in-Chief at 9DASHLINE
As February unfolds, global politics remain in flux, and Indo-Pacific players are under pressure to adapt to evolving security, economic, and strategic challenges. In East Asia, tensions in the Taiwan Strait remain a focal point, with China ramping up military pressure while the US and its allies reinforce deterrence measures. Meanwhile, the Pacific Islands are increasingly asserting their agency in the face of intensifying US-China competition, leveraging their strategic location to secure economic and security commitments. Against this backdrop, India and Australia are consolidating their roles as key Indo-Pacific powers, engaging in expanded military exercises, economic partnerships, and diplomatic efforts to shape the regional order.
The second Trump administration is reshaping global responses from Europe to the Indo-Pacific with leaders bracing for renewed volatility in US engagement, hedging their bets through deeper regional integration and diversified security partnerships with middle powers. Our two briefs this month unpack these critical dynamics. Friedrich Merz’s transition from opposition leader to German Chancellor raises pressing questions about the future of Germany’s China policy. Our first brief analyses whether his hardline rhetoric will translate into action, or whether economic and coalition pressures will steer Berlin toward a more pragmatic approach. Meanwhile, Southeast Asian governments are scrambling to navigate the turbulence of a Trump return, from recalibrating trade policies to mitigating risks posed by potential US aid suspensions. Our second feature explores how Southeast Asia is positioning itself in response to Trump 2.0, balancing strategic interests amid mounting uncertainty over US foreign policy.
Across the Indo-Pacific, economic and political shifts continue to reshape the regional landscape. India’s latest budget signals a push for youth employment and tax relief while strengthening aid commitments to key South Asian neighbours. Yet, geopolitical tensions persist — Pakistan and China deepen CPEC cooperation despite security concerns, Bangladesh faces escalating political unrest, and Sri Lanka’s new budget prioritizes economic recovery while staying within IMF constraints. In Southeast Asia, concerns over a potential US-China “grand bargain” loom large, as regional leaders fear being sidelined in major security negotiations.
As 2025 progresses, the Indo-Pacific remains a region in motion, caught between economic realignment, security challenges, and great-power manoeuvring. The Navigator will continue to bring you in-depth analysis on these critical trends — subscribe today to stay ahead of the curve.
FROM OPPOSITION TO OFFICE: WILL MERZ KEEP HIS TOUGH STANCE ON CHINA?
By Roderick Kefferpütz, Nonresident Senior Fellow at the Atlantic Council
As leader of the opposition in the German Bundestag, Friedrich Merz talked a tough game on China. He warned German companies about the risks of investing in China, criticised Chancellor Scholz for his weak stance, and labelled China, Russia, Iran, and North Korea an “axis of autocracies” engaged in a “systemic conflict” with liberal democracies.
But talk is cheap. It’s easy to sound tough on China from the opposition benches. Within Chinese leadership circles, his statements have been taken with a pinch of salt and dismissed as simple electioneering. Now the question is: will soon-to-be Chancellor Merz, walk his talk? A variety of factors suggest otherwise.
First, China is unlikely to top his agenda. Merz must focus on defence — strengthening Germany’s military, deterrence capability, and managing transatlantic tensions under Trump — and on reviving the economy, which has been in recession for two years. With these pressing challenges, he will have little bandwidth to proactively shape China policy.
Second, economic recovery concerns make him unlikely to take a hard line towards Beijing. He will likely avoid strong economic security measures that could hamper trade, especially if the EU faces trade tensions with Trump’s America. The European Commission has already put planned economic security measures on hold, waiting to see how the global trade landscape evolves.
Given this cautious approach, Merz may prioritise stability in EU-China economic relations rather than confrontation. If the EU decides to take a harder line on China, such as imposing trade restrictions or tariffs, he could seek to slow down or water down these measures to protect German industry. This would align with long-standing concerns from major German business leaders. Notably, Merz has previously signalled opposition to EU tariffs on Chinese electric vehicles.
Third, his future coalition partner, the Social Democrats, has historically pursued a softer line on China, meaning there will be little internal pressure for a tougher stance. Some within his own CDU/CSU faction also favour stronger business ties with Beijing, potentially reinforcing this tendency. Meanwhile, the opposition will be dominated by the pro-autocrat AfD and Linke, leaving the Greens as the only party advocating a tougher China policy.
Ultimately, while Merz may have talked tough in opposition, his room for manoeuvre as chancellor will be far more constrained.
SOUTHEAST ASIA GRAPPLES WITH THE UNCERTAINTIES OF TRUMP 2.0
By Hunter Marston, Southeast Asia Associate at 9DASHLINE
Southeast Asia is scrambling to respond to the policy upheaval unleashed by US President Donald Trump’s administration in Washington. Regional countries are trying to position themselves favourably to take advantage of Trump’s well-known transactionalism while avoiding the brunt of Washington’s frustration. Meanwhile, the suspension of US foreign aid has placed vulnerable populations on the Thai-Myanmar border in jeopardy as aid clinics and nongovernmental organisations that relied on the US Agency for International Development (USAID) for support desperately seek alternative sources of funding.
The regional bloc, the Association of Southeast Asian Nations (ASEAN), is planning a special summit with leaders from the ten member states and the United States to raise their concerns with the administration’s proposed tariffs. Since his first term in office, Donald Trump has repeatedly criticised countries which carry large trade surpluses with the United States. Trump has threatened a 10 per cent tariff on all countries across the board and tariffs as high as 60 per cent on China. Some analysts view Trump’s proposed tariffs as the opening move in negotiations to rebalance trade deficits and seek other concessions from targeted countries.
Vietnam wasted little time in taking steps to avoid potential sanctions. In mid-February, Hanoi announced anti-dumping duties on Chinese steel imports, signalling its awareness that it is a likely target for US tariffs on Chinese products coming through Vietnam. Vietnam was widely seen as a top beneficiary of relocated supply chains as a result of the US-China trade war during the first Trump administration.
Singapore, one of the staunchest US partners in the region for decades, has shown signs of its growing unease with the America First rhetoric coming out of Washington. In a speech on 14 February, Minister for Defence Ng Eng Hen referred to the fundamental transition underway in the world order as a “great disruption”, warning that the “US has now willy-nilly [changed its role] from liberator…to a landlord seeking rent”.
Southeast Asia is equally concerned about the possibility of the US and China striking a grand bargain that cuts them out of a deal covering the South China Sea or Taiwan. Regional countries fear the return of a might-makes-right world that ignores the interests of smaller powers. The challenge will be to persuade Washington to take Southeast Asia’s interests seriously by demonstrating their value for the US Indo-Pacific strategy.
ACROSS THE INDO-PACIFIC
South Asia
Indian Finance Minister Nirmala Sitharaman presented the budget for fiscal year 2025-2026 to parliament. The new budget focuses on skilling and generating employment opportunities for the youth and also introduces new tax slabs to relieve the direct tax burden on the middle class. The budget has increased foreign aid support to its neighbours, primarily the Maldives, Myanmar, and Sri Lanka. The budget data estimates the nominal GDP growth to be 10.5 per cent for 2024-2025. Despite this, real GDP's estimated growth is merely above 6 per cent and the continuous fall of the Indian stock market indicates deeper macroeconomic faultlines. Prime Minister Modi also visited the United States this month and signed the US-India COMPACT to facilitate military and technological partnership. Contrary to on-camera camaraderie, the first month of the second Trump presidency has introduced stumbling blocks over tariffs, deportations, and USAID in Delhi-Washington ties.
Pakistan's President Asif Ali Zardari held talks with Xi Jinping over CPEC 2.0 during his state visit to China. This meeting follows the fourth round of Pakistan-China Bilateral Consultations (BPC) held in January 2025. Despite disruptions due to the Baloch movement, CPEC’s second phase focuses on holistic bilateral cooperation by going beyond infrastructure development to promoting inclusive growth.
Political turbulence continues in Bangladesh as thousands have been arrested under the interim government's 'Operation Devil Hunt' to arrest ‘destabilising elements’. Most of the people arrested are either members of Sheikh Hasina's Awami League or its associated organisations. The ousted Prime Minister, in a virtual address, criticised the interim government for vandalising Sheikh Mujibur's historic residence and attempting to undo the fruits of Bangladesh's independence struggle. The incident has further put pressure on Delhi-Dhaka ties as the Yunus government accuses India of aiding instability by hosting Hasina and failing to extradite her.
In Sri Lanka, President Aruna Dissanayake also presented his government's first full budget aimed at reviving the country’s economy. The budget promises five per cent growth in 2025 as well as digitising the economy along with a phased wage hike. Despite the campaign promise to reassess the USD 2.9 billion IMF bailout and associated conditions, the fiscal and monetary measures remain aligned with the lending conditions.
Southeast Asia
In the Philippines, the impeachment saga of Vice President Sara Duterte, daughter of former President Rodrigo Duterte, continues to roil politics in Manila. The vice president, who was impeached on 5 February over the questionable use of federal funds and for suggesting in a November interview that she had contracted a hitman to assassinate President Ferdinand Marcos Jr., has requested that the Supreme Court nullify the impeachment, which would bar her from public office for life.
The Association of Southeast Asian Nations (ASEAN)’s special envoy to Myanmar, Othman Hashim, met with leaders of the State Administration Council (SAC) military junta in Naypyidaw during his trip from 6-8 February. Hashim, a former secretary general in Malaysia’s Foreign Ministry, reportedly urged the SAC to end the war and comply with the ASEAN’s 2021 Five Point Consensus. Following his trip to Naypyidaw, the special envoy travelled to Bangkok where he met with representatives of the opposition National Unity Government and leaders from the Karen National Union as well as other ethnic minority groups.
Indonesia held the latest biannual Multilateral Naval Exercise KOMODO (MNEK) in Bali from 16-22 February, hosting more than 20 navies, including Australia, India, China, France, Russia, and the United States. Additionally, the US and Thailand have launched the Cobra Gold military exercises, involving 30 nations and spanning land, air, maritime, and space domains, with the exercises running through March 11 and focusing on issues like humanitarian assistance, disaster response, cyberattacks, and intelligence gathering via satellites.
Vietnam hosted the second iteration of the ASEAN Futures Forum in Hanoi from 25-26 February, showcasing its rising aspirations as a middle power and commitment to multilateralism and the rule of law. The fact that the forum has been expanded from one day to two likely indicates Vietnamese leaders’ interest in building on what was largely regarded as a success when the forum was first convened last year. This year’s theme is “Building a United, Inclusive and Resilient ASEAN amidst Global Transformations”, in line with the theme of Malaysia’s current chairmanship of ASEAN, which has emphasised inclusivity and sustainability.
East Asia
With Donald Trump’s unconventional approach to foreign affairs bringing global instability, China is projecting confidence and stability, highlighted by Wang Yi’s speech at the Munich Security Conference. Beijing is preparing for long-term competition, especially in the technology domain, evident from Xi Jinping’s choreographed meeting with the biggest names in China’s tech sector. However, Beijing continues to escalate its pressure around Taiwan, including unannounced live-fire exercises off Taiwan’s southern coast and a record number of air and sea incursions. There is a significant risk for miscalculation as Beijing seeks to further alter the status quo before Trump turns his attention to Asia.
In Taiwan, President Lai Ching-te announced he would introduce a special budget to increase defence spending to more than 3 per cent of GDP (up from earmarked spending at about 2.45 per cent). This is in response to the US calling for Taiwan to spend more on its defence and worries about Taiwan’s record trade surplus with the US. Reports say Taipei is looking to spend more than USD 7 billion on US arms. The huge question is whether Lai can convince the China-friendly KMT, which has a combined majority in parliament, to approve the budget — no small feat.
In Hong Kong, the territory’s oldest pro-democracy party, the Democratic Party, announced it will begin the process of disbanding. While they did not say whether the decision was due to pressure from Beijing, party chair Lo Kin-hei told reporters: “We considered the overall political environment in Hong Kong and all those future plans that we can foresee, and that is the decision that we make”.
Japan has been diplomatically proactive since Trump’s return to the White House, strengthening regional alliances and pushing the Japan-US alliance forward. Prime Minister Ishiba found common ground on China in his meeting with Trump, including new language on Taiwan, and expressed optimism on averting tariffs. The foreign ministers of Japan, the US, and the Philippines agreed to take their alliance to “new heights”. It remains to be seen how China will respond to this alliance-building and the deepening US-Japan-Taiwan stance.
South Korea remains gripped by political upheaval following President Yoon Suk Yeol’s impeachment and has been quiet on the diplomatic front. An impending decision by the Constitutional Court on whether Yoon’s martial law decree constituted a violation of the Constitution could either reinstate Yoon or trigger a new election, potentially shifting Seoul’s foreign policy stance. Interestingly, languishing in the polls before the decree, Yoon’s People Power Party (PPP) has seen a surge in support, with conservative voters becoming more united and polarisation increasing.
The Pacific
In the Cook Islands, Prime Minister Mark Brown survived a no-confidence vote on 26 February, following criticism of a security and economic partnership with China. The agreement, which includes infrastructure funding and security cooperation, has sparked debate about sovereignty and alignment amid US-China tensions. Opposition parties have warned that the agreement could compromise its autonomy.
In Fiji, the government's decision to relocate its embassy to Jerusalem has drawn sharp criticism from Palestine and Muslim-majority nations, with Palestine’s Foreign Ministry calling the move a violation of international law. While Fiji has framed the decision as a step toward strengthening ties with Israel and its Western allies, it risks complicating relations with Middle Eastern partners and faces domestic scrutiny over its timing and motives. Fiji recently hosted a Pacific leaders’ summit on sustainable development, where nations debated a moratorium on deep-sea mining. Fiji and Vanuatu support the ban, while others, including Nauru, favour regulated mining to boost their economies.
In Papua New Guinea, negotiations for a new defence treaty with Australia aim to enhance military cooperation and address internal security challenges such as tribal violence and border disputes. The treaty underscores Australia’s broader Pacific Step-Up initiative, designed to counter China’s growing influence in the region. Prime Minister James Marape emphasised the importance of regional stability and sovereignty in discussions.
In Nauru, a controversial “golden passport” program offers citizenship to investors contributing to climate resilience projects. Critics, including Transparency International, argue that similar schemes could facilitate geopolitical influence-peddling and lack transparency. Meanwhile, Nauru and Kiribati have signed an agreement to boost air connectivity to improve tourism, trade, and cultural exchange between the two nations. Kiribati’s 2023 decision to switch diplomatic recognition from Taiwan to China continues to shape its foreign policy, with Beijing funding infrastructure and climate resilience projects.
In New Caledonia, political leaders held their first bipartisan meeting in recent years on 26 February, signalling a potential thaw in long-standing tensions over independence from France. The meeting focused on economic recovery and political reconciliation following violent protests in 2024, with France pledging to support economic development while maintaining its strategic presence in the Pacific.
In Samoa, Prime Minister Fiame Naomi Mata’afa survived a no-confidence vote amid opposition criticism of her government’s handling of economic and social issues, highlighting ongoing political instability. Samoa's government has accused the China-backed APT40 group of launching sophisticated cyber-attacks on government systems and critical infrastructure across the Pacific. This marks the first time a Pacific island nation has publicly attributed cyber espionage to a Chinese government-linked group.
In the Marshall Islands, a February 2025 report highlighted heightened cybersecurity risks, prompting calls for international assistance to bolster defences against digital threats. Meanwhile, the nation continues to grapple with the existential challenges posed by climate change and rising sea levels. On Norfolk Island, the ongoing push for self-governance reflects tensions with Australia over cultural identity and governance rights, with local leaders advocating for greater autonomy.
Meanwhile, the recent presence of Chinese warships conducting live fire exercises in waters near Australia and New Zealand has heightened concerns, with initial reports indicating that the alarm was first raised by a commercial airline pilot crossing the Tasman Sea. The incident further highlights China’s growing naval assertiveness and the intensification of its challenge to traditional Western influence in the Pacific.
THE BEST OF 9DASHLINE
In case you missed them, here are some of 9DASHLINE's most insightful articles published this month exploring China’s expanding influence and its positioning vis-à-vis Russia and the US, as well as the strategic balancing acts that smaller states must navigate amid intensifying great power competition.
CHINA'S PREFERRED ENDGAME IN UKRAINE IS A HYBRID PEACE
Since Russia's invasion of Ukraine in 2022, China has remained a crucial supporter of Russia — politically, diplomatically, and economically — while carefully balancing its global positioning.
In this insightful article, Justyna Sczudlik (Deputy Head of Research, Polish Institute of International Affairs) explores China's strategic calculations, arguing that Beijing views Russia as an essential partner in countering US dominance but remains wary of a decisive Russian victory or defeat. Sczudlik suggests that China prefers a "hybrid peace" — a frozen conflict that prevents Russia's collapse while keeping the West preoccupied in Europe. Looking ahead, she warns that such an outcome serves China and Russia but undermines Ukraine, Europe, and the rules-based order.
HOW THE RUSSIA-NORTH KOREA ALLIANCE CHALLENGES CHINA'S STRATEGIC INTERESTS IN NORTHEAST ASIA
Amid rising tensions in Northeast Asia, Anny Boc (PhD candidate at the Freie Universität Berlin) examines China's delicate balancing act between its strategic interests and its longstanding ties with North Korea and Russia. While Beijing has sought stability on the Korean Peninsula, Pyongyang’s growing military alignment with Moscow — involving troop deployments to Russia and a mutual defence treaty — complicates China's regional position.
Boc highlights that while China officially distances itself from the deepening Russia-North Korea alliance, it risks being perceived as part of a new ‘Northern Triangle,’ contradicting its own Global Security Initiative. With South Korea, Japan, and the US strengthening security cooperation, Beijing faces increasing pressure to navigate its role carefully, wary of both geopolitical entanglements and its strategic rivalry with Washington.
IN DIALOGUE: TAIWAN
Central and Eastern Europe’s (CEE) relationship with Taiwan is evolving against a backdrop of shifting global dynamics. Donald Trump’s return to the White House raises new questions about the future of Europe-Taiwan ties and how CEE countries will navigate this changing landscape. Meanwhile, Slovakia’s political trajectory under Prime Minister Robert Fico signals a deepening alignment with China and Russia, echoing trends seen in Hungary. As democratic backsliding reshapes domestic and foreign policy across parts of the region, China’s influence continues to grow.
In this special feature, 9DL’s Head of Associates Network, Dr Zsuzsa Anna Ferenczy, discusses what these developments mean for CEE, Taiwan, and the broader geopolitical order with Matej Šimalčík, a Taiwan Fellowship recipient who is based at the Institute for National Defense and Security Research (INDSR) in Taipei until August this year.
NO ROOM FOR MISSTEPS: CAMBODIA’S STRATEGIC WISHLIST FOR TRUMP 2.0
As the US navigates its relationship with Cambodia under a returning Trump administration, Phnom Penh seeks a recalibrated approach that prioritises economic and security cooperation over ideological confrontations.
Here, Chhay Lim (Visiting Fellow, Royal University of Phnom Penh) explores Cambodia’s efforts to move beyond perceptions of being a proxy for Beijing, advocating for a pragmatic strategy that balances great power ties. Examining key priorities such as trade diversification, infrastructure development, and maritime security, Lim highlights Cambodia’s concerns over renewed US pressure on democracy, particularly with figures like Marco Rubio shaping policy.
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