The Asia Outlook: 2025
As the global community steps into 2025, the Indo-Pacific region remains the epicenter of many of the most pressing political developments facing humanity. China’s role in our multipolar world order continues to evolve while the domestic challenges weigh on democratic confidence in Japan and South Korea. In Central Asia, ripple effects from the Russo-Ukrainian War and deviating national aims emphasize the need for sustainable dialogue within the region while South and Southeast Asia sit at a crossroads as countries like Myanmar and Bangladesh search for solutions to their respective domestic turmoils. In short, the Indo-Pacific will be impossible to ignore this year.
Looking ahead through 2025, The Asia Cable’s mission to provide reliable news and insight on the most pressing developments in the region remains steadfast and we look forward to another exciting year in the field of international affairs. The following briefs on trends to watch in 2025 are the products of a coordinated effort by multiple members of our staff to provide our readership with an erudite and practical understanding of the region’s most important issues and we are thrilled to present this work to you. Your daily readership and engagement are the lifeblood of The Asia Cable and fuel our continued efforts to keep you informed on this crucial region.
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Table of Contents
Japan - Caleb Mills, Alex Gintz
South Korea - Caleb Mills
Special thanks to Rachael Rhine Milliard for her continued editorial contributions.
China
Balancing Priorities
As 2025 dawns, Xi Jinping faces a critical juncture in his leadership, balancing domestic imperatives and external challenges. Domestically, Xi is expected to double down on his vision of development, prioritizing high-tech innovation and self-sufficiency, while extending his hallmark anti-corruption campaign to reinforce party discipline amid signs of internal dissent. On the international front, the return of Donald Trump to the White House introduces new volatility to U.S.-China relations, with potential escalations in trade restrictions and geopolitical competition. Concurrently, China's economic recovery remains a top priority, as Beijing seeks to reignite growth and address lingering structural issues to maintain public confidence in the face of mounting uncertainties.
The Domestic Front
In his 2025 New Year address, President Xi Jinping highlighted China's economic rebound, noting that GDP is expected to surpass 130 trillion yuan. He emphasized achievements in grain output, regional development, urbanization and green initiatives, stating, "Indeed, a more beautiful China is unfolding before us." Xi also celebrated technological advancements, including breakthroughs in integrated circuits, artificial intelligence, and quantum communications, and milestones such as producing over 10 million new energy vehicles and the Chang'e-6 lunar probe collecting samples from the moon's far side. Looking forward, he outlined plans to fully complete the 14th Five-Year Plan, implement proactive policies, and promote self-reliance in science and technology to maintain economic and social development.
The centralization of power around Xi has been an exigent theme of Chinese politics since he rose to the position of General Secretary of the Communist Party of China in 2012 and was largely cemented at the Party’s 20th National Congress, where Xi secured an unprecedented third term and a number of his political allies were selected for high-level positions. Two years later, Xi's dominance in elite politics is expected to continue, with an empowered disciplinary system enforcing cadre loyalty and a sophisticated domestic security apparatus suppressing dissent. However, challenges such as fiscal strain in local governments, low confidence among entrepreneurs and potential trade conflicts with the United States may hinder his ability to implement policies effectively.
Xi’s anti-corruption campaign persisted through 2024 and will in all likelihood continue at pace through 2025. In January, Xi called for the Party to “turn the knife inward” in order to weed out corruption within the ranks where, in 2024 alone, 56 cadres of the vice-ministerial level or higher were placed under investigation. This number, an increase from 2023’s figure of 45 officials placed under investigation, marks a nearly 25% rise, indicating an intensifying effort to root out corruption within the Party. In 2024, the campaign notably targeted military officials, leaving the readiness and organization of China’s military less than clear for 2025.
Balancing the enforcement of anti-corruption measures with the need for effective governance and military readiness will be a critical challenge for Xi in the coming year.
Trump on the Horizon
As Donald Trump prepares for a return to the presidency in 2025, his approach to U.S.-China relations warrants close scrutiny, particularly in the areas of trade, security, and technology.
Trade: Trump’s proposal for sweeping tariffs on Chinese imports, including rates as high as 60%, represents a dramatic escalation in his protectionist trade policies. While the stated aim is to reshore U.S. manufacturing and reduce dependence on Chinese goods, economists warn that these measures could significantly raise household costs and disrupt critical supply chains. China is expected to retaliate with measures such as export restrictions on rare earth minerals or heightened scrutiny of U.S. companies operating within its borders, though such moves risk exacerbating Beijing’s economic vulnerabilities while also placing further strain on already tense U.S.-China relations.
Security: Trump's previous administration approved substantial arms sales to Taiwan, including a $2.37 billion deal in 2020, signaling strong support for Taiwan's defense. Recent reports suggest that Taiwan is considering a $15 billion arms package to bolster its defenses in anticipation of Trump's return. Trump took a hard stance against China’s interests in the South China Sea during his first term, but increasingly assertive posturing by China in the area leaves the president-elect a smaller margin of error in his approach to the region.
Technology: In his first term, Trump took action against Chinese tech companies like TikTok and Huawei, citing national security concerns. Notably, his stance on TikTok has evolved; he has since conveyed his interest in addressing the TikTok issue through political means. Regarding semiconductor chips, Trump's first administration imposed export controls to limit China's access to advanced semiconductor technology, aiming to curb China's technological advancements and protect national security interests. In response, China has been aiming to bolster domestic technological innovation and reduce reliance on foreign technology. This strategy includes significant investments in the semiconductor sector to achieve self-sufficiency and mitigate the impact of U.S. export controls.
Trump’s return to the White House in 2025 could redefine the already volatile U.S.-China relationship. Whether it’s a trade war that impacts both countries’ economies, heightened military tensions over flashpoints around Taiwan and the South China Sea, or a full-scale technological decoupling that reshapes global markets, his policies will be impossible to ignore. These moves may force China to recalibrate its strategies, setting the stage for a geopolitical showdown with ripple effects far beyond the Indo-Pacific.
Economic Uncertainty
In 2024, China implemented a series of fiscal and monetary measures to rejuvenate its economy amid sluggish growth and declining investor confidence. The People's Bank of China reduced interest rates and lowered banks' reserve requirement ratios to enhance liquidity and encourage lending. Additionally, the government introduced a substantial fiscal package, including the issuance of special treasury bonds totaling 3 trillion yuan (approximately $411 billion) to support infrastructure projects and stimulate consumption. These efforts aimed to address challenges such as the property market downturn and weak consumer demand.
As 2025 commences, the outcomes of these interventions present a mixed picture. While there has been a modest uptick in economic indicators, with GDP growth reaching about 5% in 2024, underlying structural issues persist, including high local government debt and an oversupply in the real estate sector. To navigate these challenges, China's leadership is formulating the 15th Five-Year Plan (2026-2030), which is expected to emphasize innovation, green development, and technological self-reliance. Preliminary studies for the plan have already begun, focusing on significant theoretical and practical issues concerning the promotion of Chinese modernization.
Looking ahead, China's economic trajectory remains uncertain. The effectiveness of the forthcoming Five-Year Plan will depend on the government's ability to implement structural reforms, manage debt levels, and foster a more consumption-driven economy. Additionally, external factors, such as potential trade tensions and global economic conditions, will play a crucial role in shaping China's economic landscape in the coming years.
Japan
A Year of Change
The Japanese political scene has seen dramatic changes since the assassination of former Prime Minister Shinzo Abe in 2022. In the following two years, LDP governments have struggled to escape scandalous reputations, ultimately ending Fumio Kishida's premiership and, most recently, electorally crippling the current Prime Minister, Shigeru Ishiba. As the new year begins, what other changes are around the corner for one of the world’s most important democracies?
Will Ishiba’s Rough Start Define His Tenure?
In late October, after suffering a stunning loss in the snap election he called, Ishiba’s government was in trouble. A seemingly endless stream of scandals rocked his young government, and the electorate punished the coalition accordingly. Briefly, it looked as if the LDP’s historic stranglehold on Japan’s national government might be in jeopardy.
That concern was short-lived.
On Nov. 12, Ishiba cruised to victory in a runoff election for the premiership. After reestablishing his foothold in the Diet, Ishiba quickly got back to work. Despite leading a minority government, his cabinet approved a record-breaking defense budget in late December. If his government’s productivity is any indication, the rough start to Ishiba’s premiership may not have as long-lasting of an impact as some previously thought. Considering the historic dominance the LDP has had on Japanese politics, it’s doubtful that Ishiba’s government will face electoral defeat twice in a row. If he continues to govern effectively and enact popular policies, Ishiba can depend on his party’s deep cultural and political roots among the Japanese public to carry him through to a successful tenure.
The Year of Defense Spending
Following a few years of increased focus on defense spending and development since the implementation of Japan’s Defense Buildup Program (issued in 2022), the Japanese Cabinet approved an 8.7 trillion yen ($55 billion) defense budget for 2025 on Dec. 26, up from the 7.95 trillion yen ($50.38 billion when accounting for inflation) budget which was approved for the 2024 fiscal year. The new defense budget is part of a record 115 trillion yen ($730 billion) national budget bill which Japan’s National Diet must approve by March for the bill to take effect.
The 2025 defense budget includes allocations for long-range cruise missiles, deployment of U.S.-made Tomahawks, and investments in unmanned weapons and advanced fighter jets. Additionally, Japan plans to construct three new multi-purpose destroyers and is competing to supply warships for the Australian Navy, contributing to regional security cooperation. These investments are part of Japan’s current National Security Strategy, which mentions China more than 30 times and makes 16 mentions of both Russia and North Korea.
Economic difficulties have weighed heavily on the minds of Japanese policymakers as the yen weakened measurably against other major currencies, marking its fourth consecutive year of decline against the value of the U.S. dollar. The yen’s reduced value may impact the execution of Japan’s planned defense buildup as it finds a decreasing bang for its proverbial buck, stretching further than desired to meet its developmental goals. Challenges in military recruitment and political headwinds faced by Ishiba’s minority government will likewise place a magnifying glass on the tangible manifestations of Japan’s defense ambitions in 2025.
How Will Ishiba Approach Trump 2.0?
Prime Minister Ishiba was quick to signal his desire to meet with President-elect Trump soon after the latter’s victory in the 2024 United States presidential election. Ishiba and Trump held a phone call on Nov. 7 where Ishiba congratulated Trump on his victory. Both sides expressed their interest in elevating the U.S.-Japan alliance and arranging an in-person meeting as soon as possible. The two now plan to meet soon after Trump’s inauguration (Jan. 20), with Japan’s ongoing defensive buildup and Japanese investments in the U.S. being key issues for Ishiba.
However, Ishiba faces distinct challenges compared to his predecessors Fumio Kishida and Shinzo Abe, the latter of whom held a strong rapport with Trump. The aforementioned electoral setbacks, which left the LDP with a minority stake in Japan’s legislature, will require the party to maintain and perhaps grow its coalition to lifeline its policy agenda. In recent years, the LDP has relied on its parliamentary majority to push legislation forward, delegating matters of a consensus to a lower level of concern. Now, Ishiba and his coalition will have to account for the will and goals of other actors, such as the Constitutional Democratic Party, in matters concerning U.S.-Japan relations.
Recently, President-elect Trump has expressed opposition to Nippon Steel's proposed acquisition of U.S. Steel, citing concerns over American industrial strength and national security. He has pledged to block the deal and implement tax incentives and tariffs to bolster the U.S. steel industry. In turn, Japanese officials have been cautious in their public statements, emphasizing the importance of the bilateral relationship and expressing a desire to work closely with the incoming administration.
South Korea
Chaos and History
Saying South Korea has experienced a tumultuous year in politics is an understatement. On Dec. 14, the parliament voted to impeach President Yoon after his short-lived martial declaration, which saw lawmakers fighting through police barricades to vote on overturning the controversial decree. Add to this a pension crisis and the continuing tensions with their infamous neighbor to the north, and Seoul will surely have its hands full as it turns to the new year.
The Never-Ending Impeachment
South Korea is no stranger to executive impeachments; or, for that matter, executive convictions and imprisonment. However, the political scene in Seoul took a wild turn on Dec. 27, when the parliament first voted to impeach acting President and current Prime Minister Han Duck-soo. Then, in a historic turn of events, the minister of finance and economy, Choi Sang-mok, took over the roles of acting prime minister and president.
The nation finds itself at a crossroads of significant magnitude. Perhaps at no other time has South Korean democracy faced such a stern test. The good news is that, for now, it seems as if they’ve passed with flying colors. The parliament’s swift action and the international backlash that followed Yoon’s declaration demonstrated to all the health of the nation’s democratic system. As South Korea awaits the constitutional court's verdict on both Yoon and Han’s impeachments, it is safe to say that Seoul can take a moment and breathe a sigh of relief for now.
North Korea Temperature Check
It’s surprising to see so much about South Korea in the news without much mention of its northern counterpart. Indeed, for a year full of geopolitical developments on both sides, there has been little to discuss regarding this longstanding feud. Besides the standard aggressive rhetoric from Pyongyang and the occasional border mishap, it’s been a relatively uneventful year.
It’s far too soon to judge whether or not this relative quiet is due to an actual push for peace or simply that both states are more or less preoccupied. Indeed, North Korea, which is sending thousands of troops to fight in Ukraine, has focused on cementing its unique relationship with Russia for much of this past year. It’s unclear whether this trend will continue into the new year. However, it would be wise for analysts and interested observers to remain cautiously realistic about relations in the near future.
Central Asia
Riding the Wave or Blazing Its Own Trail?
Well, it turns out to be a bit of both. Central Asia will always be confined by geography: fully landlocked between Russia, China, Afghanistan, and Iran and covered with deserts and mountains, the region’s isolation has forced economic dependence on Russia for military imports and labor migration and on China for infrastructure projects and trade. Over three decades after its independence, Central Asia remains one of the most isolated and misunderstood regions of the world.
Ukraine Felt From Asia
Russia’s ongoing war of aggression against Ukraine has held significant implications for Central Asia. European sanctions have redirected overland trade away from Russia's borders, driving the development of infrastructure along the Middle Corridor. This has driven the development of infrastructure along the middle corridor, including the expansion of the port of Baku and the start of the long-awaited China-Kyrgyzstan-Uzbekistan railway. 2025 should bring continued urgency to developing more transport infrastructure along the middle corridor.
Central Asia has also taken a starkly different stance on Russia since 2022 while still avoiding a full break in relations. While Turkmenistan and Uzbekistan have been the two most isolated Central Asian states since independence, there has been an increase in the number of incidents since 2022 of Central Asian states distancing themselves from Russia, indicating that the region doesn’t feel as connected to Russia as they once did. Kazakhstan called the Wagner coup attempt a Russian ‘internal matter,’ rejecting their plea for military support. Tajikistan’s government, which has historically been the most keen to establish a close bond with Moscow, even hit out at Russia for its response to the Crocus City Hall attack back in March 2024. In September, the Uzbek deputy speaker of parliament told the Russian foreign minister to mind her own business after she ridiculed an Uzbek teacher for her actions while teaching a Russian language class. Kazakhstan will be joining Turkmenistan and Uzbekistan in adopting a Latin alphabet, switching away from their current Cyrillic script, with a full transition projected to be complete by 2031. As the post-colonial independence continues, we should expect to see more moves distancing Central Asia from Russia in 2025.
Air Quality
For Central Asia, air quality remains a consistent issue, particularly in the winter, when cities need to tap into their energy supplies to provide residential heating. Cities like Almaty, Bishkek, Tashkent, and Dushanbe regularly land among the worst in the world on the air quality index. Given a lack of solutions for Central Asia’s biggest contributors to poor air quality, we should only expect to see similar or worse levels of air quality in 2025. The use of dirty coal to fuel residential heating and an overreliance on personal vehicles contribute as the largest sources of Central Asia’s PM2.5 emissions. The short-term solutions and lack of government accountability continue to create challenges for lower-income residents who struggle to afford cleaner forms of energy.
Border Negotiations
2024 saw a breakthrough in Kyrgyz-Tajik border negotiations, a 33-year-long issue that has sparked the only case of armed conflict between Central Asian states since 1991. Border skirmishes have ramped up since 2010, with the two biggest attacks in 2021 and 2022 killing 201 civilians, prompting Human Rights Watch to call out both countries for committing apparent war crimes. The Kyrgyz-Tajik border, like all other borders in the region, didn’t exist prior to the Soviet Union, a time when farmers and herders freely traveled as they needed for water and land, which is now being determined by government negotiations. While it is a positive development, it remains unclear how well communities on both sides of the border will cope with new border demarcations.
Dialogue Platforms
Recent years have seen a sharp increase in C5+ formats. Without a regional body like ASEAN or ECOWAS, the regional dialogue platforms are the only instance in which all five Central Asian countries work to communicate together with an outside partner. Between the SCO, EAEU, CSTO, CIS and OTS, there are no regional economic or security organizations in which all Central Asian states participate. Each state remains independent with its economic and security goals, and the regional summits provide an opportunity for all the states to come together and discuss their goals for the next year without binding legislation to tie them down. Central Asia will continue to play its part in these non-committal summits, and, having already seen dialogues with Germany, Japan, South Korea, China, Russia, the U.S. and India, along with a regional summit with Gulf countries, it should come as no surprise to see more summits with other key partners in 2025.
South and Southeast Asia
Myanmar’s Civil War
In late 2023, Myanmar's civil conflict intensified as the Brotherhood Alliance, comprising the Myanmar National Democratic Alliance Army (MNDAA), Ta'ang National Liberation Army (TNLA), and Arakan Army (AA), launched Operation 1027. The MNDAA captured Laukkaing in Shan State, the TNLA seized critical transit points on Asia Highway 1, and the AA made large gains in Rakhine State. Simultaneously, the National Unity Government (NUG) People’s Defense Force (PDF) conducted drone strikes against junta targets, while junta forces countered with airstrikes and revived conscription to address manpower losses. By April 2024, the Karen National Union (KNU) had captured Myawaddy, disrupting trade and displacing civilians into Thailand, while resistance forces expanded control in Shan and Rakhine states. The junta faced mounting challenges, including low morale, defections, and resource depletion, as resistance offensives threatened central regions like Mandalay and Naypyidaw.
By mid-2024, the resistance gained further ground, with the Brotherhood Alliance taking Lashio in Shan State. PDFs in the Mandalay Region launched successful offensives, increasing pressure on the regime. Despite these challenges, the junta has adapted its strategy by utilizing drones, maintaining air superiority, and enlisting local militias such as the Pyu Saw Htee and even Rohingya armed groups to address operational gaps. These groups enabled the regime to maintain control over crucial central areas and, importantly, the ports that facilitated the flow of material aid to support the regime. Although opposition gains have significantly weakened the junta, the regime's adaptability and resource consolidation point toward a continuation of civil war, with the possibility of regime collapse remaining uncertain into 2025.
Malaysia Chairs ASEAN
In January 2025, Malaysia will take on the annually rotating chairmanship of the Association of Southeast Asian Nations (ASEAN) for the fifth time, following previous leadership roles in 1977, 1997, 2005 and 2015. One of its responsibilities during this term will be to draft the ASEAN Community Vision 2045, which will replace the current Vision 2025 guidelines that are set to expire at the end of the year. Malaysia's leadership will be challenged as it strives to secure regional interests while maintaining ASEAN's central role in ensuring the stability of the regional framework, all while safeguarding its national priorities and interests.
During Malaysia's chairmanship, challenges involve tackling the ongoing civil war in Myanmar, managing escalating tensions in the South China Sea—where Malaysia holds claims and serves as the current coordinator for ASEAN-China relations—and fighting the rise of cyber-scamming industries in the region. The geopolitical setting further complicates matters, as Malaysia's chairmanship aligns with Donald Trump’s inauguration as U.S. president on January 20, 2025, which may heighten U.S.-China tensions affecting Southeast Asia. Under the leadership of Prime Minister Anwar Ibrahim, Malaysia is expected to adopt a proactive and confident approach to geopolitical and economic matters, striving to maintain ASEAN's cohesiveness during these challenging times.
Bangladesh at a Crossroads
In 2024, Bangladesh experienced major political turmoil, leading to the resignation and exile of Prime Minister Sheikh Hasina amid widespread protests. The interim government, headed by Nobel Laureate Muhammad Yunus, seeks extensive electoral reforms that are intended to create a credible and inclusive electoral system. These reforms are crucial to remedy historical issues related to voter disenfranchisement and political manipulation. Nonetheless, their execution faces challenges, such as logistical obstacles and the necessity of reaching a consensus among various political groups. Yunus's role during this transitional phase is vital for nurturing trust and inclusivity in Bangladesh's political arena.
As we look toward 2025, the effectiveness of these reforms will be crucial in shaping Bangladesh's future. The interim government has provisionally set the general elections for late 2025 or early 2026, depending on the completion of essential reforms and the attainment of political consensus. The public's perception will shape the situation; delays or perceived issues in the electoral process may lead to public discontent, potentially igniting fresh protests and political unrest. Therefore, balancing the urgency of timely elections with the need for thorough reform is paramount. The upcoming year will test Bangladesh's resilience and commitment to democratic ideals, offering a chance to either transcend its history of political instability or persist in cycles of unrest.
US Tariffs Loom
In 2025, increased U.S. tariffs on imports from China could significantly alter economic conditions in Southeast Asia, presenting both opportunities and challenges for the region. Nations like Vietnam, Malaysia, and Thailand may experience a surge in manufacturing as companies expedite their "China+1" strategies to avoid high U.S. tariffs, which could reach up to 60%. This could lead to a more diversified regional economy, drawing investments in the electronics, machinery and automotive sectors. However, these advantages won't be evenly shared. Vietnam, in particular, is already under scrutiny for its trade surplus with the U.S., which might result in additional tariffs or restrictions, hindering its ability to take full advantage of these changes. Additionally, this diversification within the region might create divided global supply chains, raising costs and logistical hurdles for exporters hoping to serve both Western and non-Western markets.
Southeast Asia may face risks due to China's shifting overcapacity impacting their markets. With restricted access to the U.S. market, China could flood the region with cheap surplus goods, particularly in the steel and manufacturing sectors. This influx would harm local businesses by leading to market saturation and intense price competition that detrimentally impacts domestic producers. In response, Southeast Asian nations might have to introduce protective measures like anti-dumping tariffs or import restrictions, yet these steps could endanger regional trade relations. Moreover, dependence on Chinese intermediate goods for U.S. exports creates further vulnerabilities; disruptions in the supply chain could weaken the competitiveness of Southeast Asia's export-driven economies. With the arrival of 2025, the ability of the region to address these challenges will be vital for its economic stability and strategic position in the changing global trade environment.