China
China says arms trade with Cambodia, Thailand unrelated to border conflict. China’s Defense Ministry said its arms trade with Thailand and Cambodia is unrelated to their border clashes. It urged parties to stop “speculation” after reports that Thai troops seized Chinese-made weapons from Cambodian positions. Foreign Minister Wang Yi called for a ceasefire and said false information is smearing China’s ties. Reuters, December 18
China launches $113 billion free-trade experiment on Hainan island. China made Hainan a duty-free customs zone, allowing goods with 30% local value-added to enter China tariff-free. Officials said the port aims to attract investment and support a CPTPP bid. Diplomats and economists said limits on legal and financial openness may curb success. Joe Cash, Reuters, December 18
Japan
Japan needs to possess nuclear weapons, prime minister's office source says. A prime minister’s office source said Japan needs nuclear weapons but called it unrealistic. The remarks came as Prime Minister Sanae Takaichi considers reviewing the Three Non-Nuclear Principles banning possession, production, and introduction. The source denied discussing the review with Takaichi and cited reliance on self-defense. Kyodo News, December 18
Takaichi says Japan is always open to dialogue with China. PM Sanae Takaichi said Dec. 17 that communication matters because issues remain. She said her November Diet remarks do not change policy on a Taiwan contingency. She also pledged growth-oriented budgets, crisis management investment, and fiscal discipline amid rising long-term interest rates. The Asahi Shimbun, December 18
Central Asian states to close out year with summit in Japan. The leaders of five Central Asian nations will meet Japanese Prime Minister Sanae Takaichi in Tokyo on Dec. 19-20 for a C5+1 summit, their fifth such gathering with major powers in 2025. Talks will reaffirm cooperation and expand trade. Japan, with its independent rare-earth supply chain, aims to deepen resource partnerships. Author, Eurasianet, December 18
South Korea
Lee approves appointment of new media watchdog chief. President Lee Jae Myung approved Kim Jong-cheol as chair of the Korea Media Communications Commission. The KMCC is a media watchdog replacing the Korea Communications Commission and overseeing some new media services. Kim pledged follow-up steps on the August public-broadcast reforms and said he may consider a teen social media ban. Kim Eun-jung, Yonhap News Agency, December 18
Lee suggests Daejeon-South Chungcheong Province merger ahead of local elections. President Lee Jae Myung urged lawmakers to merge the city and province before June 2026 polls. He said integration could curb Seoul-area overconcentration and support balanced development. He asked the government to provide administrative support and back legislation, noting that an opposition bill has stalled. Kim Eun-jung, Yonhap News Agency, December 18
Thailand
Thai central bank proposes controls on gold trade, ready to cut rates further. Governor Vitai Ratanakorn urged the finance ministry to regulate gold trading after flows lifted the baht. He said gold deals can drive half of baht-strengthening flows. After five rate cuts since October 2024, he said further easing is possible but limited. Orathai Sriring, Kitiphong Thaichareon, Thanadech Staporncharnchai and Chayut Setboonsarng, Reuters, December 18
Anutin confirms talks with Ekniti and Suphajee to join Bhumjaithai. Anutin Charnvirakul said Bhumjaithai aims to nominate three prime ministerial candidates for the Feb. 8 election. He confirmed talks with Ekniti Nitithanprapas and Suphajee Suthumpun, and said Ekniti would head the economic team. He said the leader ranks No. 1 on the party list. The Nation, December 18
People's Party unveils four deputy PM candidates, urges MPs to fight for the upcoming election. Leader Natthaphong Ruengpanyawut said the Feb. 8, 2026, vote will let voters choose a government without Senate input on the prime minister. He named four deputy PM candidates: Picharn, Decharut, Weerayut, and Sirikanya. They would oversee democracy, quality of life, economic, and administrative reforms. The Nation, December 18
Laos
Laos, Vietnam plan joint university, expand student exchange. Laos and Vietnam agreed Dec. 16 to establish a Lao-Vietnam University in Laos. Education Minister Thongsalith Mangnomek met PM Pham Minh Chinh in Vietnam and said preparations and recruitment will be fast-tracked. Officials said Vietnamese will be optional in Lao schools and teacher training and exchanges will expand. Phoudasack Vongsay, The Laotian Times, December 18
President calls for speedier reform of state enterprises. President Thongloun Sisoulith ordered faster reforms to make state firms profitable within five years. He shifted oversight to the Politburo-led committee chaired by Saleumxay Kommasith after slow progress and rising debt. He cited 2024 figures showing 78 of 168 enterprises made profits and urged audits, merit-based hiring, transparency, and downsizing. Vientiane Times, December 18
Philippines
Senate, House panels agree on P6.793T budget. Bicameral panel finished talks at 2:22 a.m. Thursday after nine hours. Sen. Sherwin Gatchalian said the disagreeing provisions were reconciled, and the plan is “corruption-free” with no overpriced items. The measure goes to chambers for ratification, then to President Ferdinand Marcos Jr., with Dec. 29 cited as a target. Javier Joe Ismael and Red Mendoza, The Manila Times, December 18.
ICC seeks more briefs on Duterte's appeal over jurisdiction issues. ICC Appeals Chamber ordered extra submissions on Dec. 16. Prosecutors and victims’ lawyers must file by Jan. 16, 2026, and Duterte’s team by Jan. 23, limited to 10 pages. Judges asked how Rome Statute jurisdiction articles interact with the treaty withdrawal clause. Franco Jose C. Baroña, The Manila Times, December 18
Taiwan
Opposition lawmakers propose Control Yuan impeach premier over fiscal law. A Legislative Yuan committee backed the impeachment of Premier Cho Jung-tai for refusing to countersign a revenue-allocation act. KMT and TPP lawmakers filed two censure motions. The Executive Yuan said the act is unconstitutional and would force NT$266.4 billion in borrowing. James Thompson, Kao Hua-chian, Chen Chun-hua and Huang Li-yun, Focus Taiwan, December 18
Cabinet proposes fining those calling for nonpeaceful takeover of Taiwan. Taiwan’s Cabinet proposed draft changes to the National Security Act, fining up to NT$1 million for speech or posts urging Taiwan’s forcible annexation. The Interior Ministry could order ISPs to remove or block content and limit accounts. Penalties for leaking secrets to a foreign hostile force would increase. Sean Lin, Focus Taiwan, December 18
Uzbekistan
Senate of Uzbekistan approves law on 2026 state budget. Deputy PM Jamshid Kuchkarov said 2026 growth is forecast at 6.6% and inflation at 7%. Consolidated revenue is set at 515.8 trillion soums, spending 567 trillion, and a deficit of 60 trillion soums, about 3% of GDP. Main tax rates stay unchanged, and new measures cut turnover tax to 1% for small earners. Author, Gazeta, December 18
East Asia
China’s Long Economic War. Beijing has used export bans, rare earth controls, and purchase halts to answer US chip and tariff pressure while keeping room for negotiation. The strategy targets decades of competition, with goals that include semiconductor advances, market diversification, greater value added exports, and a trading and financial system that limits US sanctions power. A four Cs framework casts China as strong in capacity and capital through industrial scale and reserves, but weak in soft power and credibility from opaque policy, fused state and commercial roles, and security fears tied to ports and Belt and Road lending. The outlook points to a long confrontation shaped by trust deficits on both sides. Zongyuan Zoe Liu, Foreign Affairs, December 16
Malign Indifference: China's Currency and the Threat to Europe. China’s deflation and the People’s Bank of China preference for yuan stability versus the US dollar have pushed the yuan down against the euro, cutting European exports to China and lifting Chinese sales into the EU. The real exchange rate is set to fall for two to three years because Beijing has limited tools to end producer price deflation. In Q3 2025, EU import values from China rose 0.2% year on year while volumes rose 7%, and EU export values to China fell 6%. Falling euro prices can erase EU anti-dumping and countervailing duties and weaken incentives for Chinese localization and investment. Options include adding currency undervaluation to EU trade defenses and using volume-based safeguards and local-content rules. Camille Boullenois, Gregor Sebastian, and Logan Wright, Rhodium Group, December 18
Insights from China’s Five-Year Plan. Recommendations for China’s 15th Five-Year Plan for 2026 to 2030 describe profound changes, with opportunity from global power transformations and a technology revolution. Four strengths anchor the outlook, the socialist system with Chinese characteristics, a mega consumer market, a strong industrial system, and a large talent pool. Risks include unilateralism, protectionism, and power politics, along with domestic strains from weak demand, growth driver transition, rural modernization gaps, employment pressure, and population aging. The strategy sets China’s pace through high-quality growth, reform, innovation, and technology self-sufficiency. High standard opening up remains central, with projected 2024 to 2028 trade over $32 trillion in goods and $5 trillion in services, and zero tariffs for least developed partners with diplomatic ties. Zhu Zhongbo, China US Focus, December 18
Chinese citizens’ affection for Taiwanese may reduce risk of cross-Strait conflict. Polling in China shows sympathetic views toward Taiwanese people and limited appetite for force, even as the state seeks to shape public attitudes. A Chicago Council on Global Affairs and Carter Center survey fielded April 25 to June 16 found 91% of respondents call Taiwanese people friends of China, while 44% call Taiwan’s current government a friend. Many respondents view the United States and Japan as unfriendly, and 57% rank a US conflict over Taiwan as a major threat. Respondents express confidence in China’s position and expectations for future strength. Other national survey work finds more support for talks than for military action, which raises political and economic costs for a war decision. Dina Smeltz and Craig Kafura, Brookings, December 18
Can China Be Trusted to Lead on AI Safety? China seeks a central role in global AI governance and promotes new mechanisms such as the World AI Cooperation Organization. Tests of DeepSeek-R1 and Alibaba’s Qwen models show jailbreak paths that yield instructions for drugs and weapons, despite claims of strict oversight. DeepSeek technical papers report a high jailbreak rate, and field tests show weak risk controls. Beijing’s AI agenda links AI to national status, export of regulatory approaches, and Belt and Road-style cooperation through the UN, BRICS, the Shanghai Cooperation Organization, and ASEAN channels. Provincial growth targets and an open-source strategy can override safety priorities, and new regulator language frames safety as a foundation for global expansion. Alex Colville, China Media Project, December 18
China’s Third Policy Paper on Latin America and the Caribbean: Expanding Influence and Ambitions. China’s third policy paper on Latin America and the Caribbean sets out an expanded, institutionalized partnership built around five programs and places solidarity and one-China demands near the start. The development agenda spans finance, energy, infrastructure, manufacturing, agriculture, science, technology, maritime issues, and environment, plus a new category of development assistance, with attention to dual-use infrastructure and high-tech cooperation that includes AI, satellites, and Beidou adoption. The peace program broadens security and law enforcement ties to cyber, nonproliferation export controls, anticorruption, and fugitive repatriation. The paper signals greater expectations for support on Taiwan and pressure on remaining Taipei partners in the region. Ryan C. Berg, Henrietta Levin, and Bonny Lin, CSIS, December 18
How Chinese cars are beating European tariffs. EU tariffs on Chinese battery electric vehicles in 2024 added maker specific surcharges on top of a 10% duty, while hybrids faced no extra levy. China’s car exports to Europe rose to nearly 1.2m in the 12 months to November, up 26% from a year earlier. Carmakers moved from pure EVs to hybrids, with hybrid exports up 155% and EV sales up 12% over the past year. Chinese brands reached 13% of Europe’s hybrid sales in October. Firms move assembly into the bloc, with production in Austria, a new BYD line in Hungary, and planned Chery output in Barcelona. The Economist, December 18
Contracts trump crusades in China’s Afghanistan policy. China has expanded engagement with Afghanistan after the 2021 fall of Kabul through envoys, trade, and infrastructure, treating the Taliban as a fact on the ground. The goal is border security and a pledge that Afghan territory will not host groups that target China, including the East Turkistan Islamic Movement. Beijing formed an economic rebuilding working group, offered tariff-free market access, revived the Mes Aynak copper deal, and funded welfare projects, while withholding formal recognition. Western governments link engagement to human rights reforms, with focus on women’s rights and education. Security spillovers, including attacks on Chinese workers in Pakistan and Tajikistan, test this model of engagement without recognition. Will McManus, East Asia Forum, December 18
Strengthening National Security Resilience in Japan. Japan’s role as a United States ally matters more as the United States-China rivalry grows, and Beijing may seek to coerce Tokyo over the alliance and territorial disputes. National resilience is tested in scenarios that include a Chinese invasion or blockade of Taiwan and pressure over contested islands. Japan’s economy and state capacity provide a strong base, but preparations for security shocks lag behind those for natural disasters. Recommended steps include treating security crises and natural disasters with equal planning priority, giving local governments steady resources for security tasks, and defining responsibility for countering disinformation during a crisis. Daniel Byman, Nicholas Szechenyi, and Riley McCabe, CSIS, December 18
The Present and Future of the KMT in Taiwan. Taiwan’s Democratic Progressive Party has faced a backlash after voters rejected an effort to recall over thirty Kuomintang legislators. The Kuomintang chose a new chair, Cheng Li-wun, whose appeals to Chinese identity have energized supporters and raised concern about alignment with Beijing. United States policy changes add pressure, including 20 percent tariffs on Taiwan and outreach from President Donald Trump to Xi Jinping that fuels worry about concessions on Taiwan. Surveys show President Lai Ching-te at 39 percent approval in November, with disapproval above 50 percent. A Kuomintang comeback is possible, but anti-DPP sentiment does not convert into Kuomintang support, given the Taiwan People’s Party draw among younger voters and doubts about Kuomintang cross Strait policy. Joshua B. Freedman, Foreign Policy Research Institute, December 18
Southeast Asia
Indonesia’s industrial policy a double-edged sword. Indonesia has revived industrial policy through large subsidies to steer investment into energy, agriculture, manufacturing, and electric vehicles. Tools include tax incentives, subsidized loans, direct finance, and export bans that keep raw materials at home, led by a nickel ore export ban that supports domestic smelting and battery production. The approach can attract foreign capital and build a regional role in EV supply chains, but it drains the budget, weakens incentives to innovate, and encourages rent seeking. Environmental and social costs include deforestation, water pollution, and displacement. Protectionist measures have triggered trade disputes, and the strategy can strain ASEAN supply chain integration. A change toward time-limited, performance-based support tied to exports, technology transfer, or R&D is recommended. Jahen F Rezki, East Asia Forum, December 18
The botched response to a devastating storm infuriates Indonesians. Cyclone Senyar hit Sumatra with floods that killed more than 1,000 people, damaged around 150,000 homes, and displaced nearly 1m residents. Jakarta has not declared a national disaster, which limits emergency powers and access to foreign aid, and President Prabowo Subianto says outside help is not needed. Local groups report slow, fragmented relief, with communities cut off by collapsed roads and bridges, missing people, and spreading disease. Rebuilding costs are estimated at 52trn rupiah. Environmentalists link the scale of flooding to deforestation, with 4.4m hectares lost since 2001 for palm oil plantations and illegal logging. The Economist, December 18