Alleged Drone Incursions Strains Inter-Korean Relations

South Korea has launched an official investigation into allegations that unmanned aerial vehicles violated North Korean airspace earlier this month, after Pyongyang claimed one flew roughly 8 km into its territory from Incheon on January 4 and another in September last year, asserting this constituted a breach of its sovereignty. Seoul has denied any military involvement, with the defence ministry noting it did not operate the drone models in question on the cited dates and emphasising there was no intent to provoke. President Lee Jae-myung has pledged a swift probe, including questioning a civilian suspect, and has described any verified crossings as serious crimes that could threaten peace on the peninsula. South Korea also reiterated openness to a joint investigation with the North, although no formal talks have occurred.

Pyongyang has seized on these incidents to intensify rhetoric against Seoul, with Kim Jong-Un’s influential sister Kim Yo-jong demanding an investigation and framing the alleged intrusions as a direct violation of North Korean sovereignty, even as she congratulated Seoul’s initial non-provocative response. Subsequently, she dismissed South Korean hopes for improved bilateral relations as an illusion, signalling resistance to diplomatic engagement and underscoring the deepening impasse in inter-Korean ties. This development comes amid a broader pattern of border-related disputes and mutual distrust, complicating Lee’s efforts to stabilise relations with the North.

Beijing Reaffirms Support for Somali Amid Postponed Visit

China’s foreign minister, Wang Yi, conveyed Beijing’s steadfast support for Somalia’s sovereignty and territorial integrity in a call with his Somali counterpart, after postponing a planned visit to Mogadishu that would have marked the first such ministerial trip in decades. The Chinese embassy attributed the delay to a “schedule change,” with Wang instead continuing his annual New Year tour of Africa. Beijing’s statement explicitly opposed any “collusion” between Somaliland and Taiwanese authorities as a bid for independence, aligning closely with Mogadishu’s stance against secessionist efforts. This diplomatic message comes as regional debates over Somaliland’s status intensify following recent moves by Israel’s recognition of the breakaway region.

China’s outreach to Somalia reflects Beijing’s broader push to solidify ties across Africa while locking in political support for its principles on sovereignty—principles that also underpin China’s position on Taiwan. In addition to reaffirming backing for Somalia’s territorial unity, Chinese officials reportedly signalled intentions to deepen cooperation across economic, security, and diplomatic fronts, building on longstanding bilateral relations rooted in historical engagement and recent development projects.

U.S. Intensifies Push to Wean Global Supply Chains Off China’s Rare Earth Dominance

The United States has urged the G7 and a broader group of partners—including Australia, India, South Korea, Mexico and EU representatives—to accelerate efforts to reduce dependence on China for rare earth elements and other critical minerals. These materials are indispensable for everything from defence systems and semiconductors to clean energy technologies, yet China currently dominates a large share of global refining capacity, creating significant strategic vulnerabilities. Bessent expressed frustration at slow progress since a mid-2025 G7 agreement and emphasised the need for urgency, even as no immediate joint policy action emerged from the Washington meetings. Washington has been negotiating bilateral and multilateral deals and pushing for expanded supply chains with allies to diversify sources.

The push comes against a backdrop of recent Chinese export restrictions and geopolitical tensions, which have highlighted the risks of concentrated supply chains. While the U.S. has concluded an $8.5 billion deal with Australia to build a strategic minerals reserve and is exploring cooperation with other producers, analysts stress that reducing reliance on Beijing’s rare earth supply will take years and sustained investment in mining, processing, and recycling capacity in allied countries. Broader proposals in Washington, including potential legislation and strengthened domestic production incentives, reflect a deepening bipartisan consensus that rare earth supply resilience is both an economic and national security imperative.

BRICS Plus Naval Drills Signal Strategic Outreach and Diplomatic Strains

China, Russia and Iran commenced a week-long naval exercise off South African waters on January 9–10, 2026, under the auspices of the expanded BRICS Plus framework, in an event dubbed Will for Peace 2026. South Africa, the host, described the manoeuvres as aimed at enhancing maritime security, safeguarding shipping lanes and bolstering interoperability among participating navies. The drills reflect a deeper foray into defence cooperation within a grouping originally centred on economic ties, with observers and select BRICS Plus members participating as well. The timing of the exercises, amid heightened geopolitical tensions involving the United States and several BRICS Plus states, has underscored the symbolic import of military engagement alongside broader diplomatic and economic coordination efforts.

However, the exercise has provoked political controversy domestically and internationally. South Africa has launched an inquiry into whether Iranian warships took part despite reported presidential instructions to limit Tehran’s role, amid U.S. criticism that Iran’s inclusion undermines regional stability and could strain Pretoria’s ties with Washington. The drills have thus highlighted fault lines within South Africa’s foreign policy between defence establishment actions and executive intent, as well as broader friction between Western capitals and BRICS Plus states over military cooperation with sanctioned or adversarial partners.

Japan Embarks on Deep-Sea Rare Earth Quest Amid Chinese Supply Squeeze

Japan has deployed the research vessel Chikyu on a month-long expedition to probe and recover rare earth-rich seabed mud near Minamitori Island in the Pacific—an unprecedented attempt to continuously extract these critical minerals from approximately 6 km underwater. The mission, which departs from Shizuoka with a crew of about 130, represents Tokyo’s most ambitious effort yet to diversify its supply of rare earth elements, which are indispensable for electronics, electric vehicles and defence technologies. Backed by some $250 million in government investment since 2018, the project aims to test commercial viability with an eye toward possible full-scale production by 2027.

The initiative comes amid a broader diplomatic and economic tug-of-war with China, which has tightened export controls on rare earths and other dual-use materials bound for Japan following a deterioration in bilateral ties over Taiwan and other strategic issues. Beijing’s actions have underscored Tokyo’s vulnerability—China still accounts for a dominant share of global refining capacity—and have pushed Japan to accelerate stockpiling, recycling and supply chain diversification efforts in coordination with G7 partners. Success in the deep-sea project could reduce Japan’s dependence on Chinese supply, but analysts caution that technological, environmental and cost challenges remain substantial, and that any meaningful reduction in reliance will require sustained long-term investment and allied cooperation.

Lee Jae-myung Calls for Diplomacy as Japan–China Tensions Risk Regional Stability

South Korean President Lee urged Tokyo and Beijing to manage their territorial dispute over the Senkaku/Diaoyu Islands peacefully, warning that escalating friction between Japan and China is “not desirable” for regional peace and prosperity. Lee’s comments came amid a broader effort by Seoul to position itself as a diplomatic bridge in Northeast Asia, even as Seoul simultaneously deepens security cooperation with Tokyo—a relationship historically strained by historical issues and competing strategic orientations. Lee underscored that stability in the region hinges on restraint and dialogue, particularly given shared challenges such as North Korean nuclear provocations, great-power competition and economic interdependence.

Lee’s intervention reflects Seoul’s delicate balancing act: strengthening ties with Japan and the United States while avoiding entanglement in bilateral tensions between its top export partner and its key security partners. Analysts interpret his remarks as an attempt to de-escalate nationalist rhetoric and prevent military miscalculations around contested waters, where Japanese coast guard and Chinese maritime agencies have recently bumped vessels. Lee’s statements also signal to Beijing that South Korea seeks comprehensive stability, not bloc alignment, even as Seoul pursues diversified diplomatic engagement and hedging strategies in a region marked by intensifying strategic competition.

Japan–South Korea Summit in Nara Advances Strategic and Cultural Cooperation

South Korean President Lee visited Japan on January 13–14 for a high-profile summit with Japanese PM Takaichi in Nara, aimed at deepening cooperation amid rising regional tensions and economic challenges. The two leaders held formal talks on security collaboration—including denuclearisation of the Korean Peninsula and regional stability—and agreed to strengthen economic security, advanced technology cooperation, and joint efforts on transnational crime, signalling an intention to move beyond historical animosities that have long constrained bilateral ties. A joint statement underscored the importance of sustained dialogue and “shuttle diplomacy” to institutionalise cooperation, particularly as both Seoul and Tokyo navigate complex dynamics involving China and the United States.

The summit also featured an unusual but widely-noticed display of cultural diplomacy: Lee and Takaichi concluded the first day with a drum session, playing K-pop hits like BTS’s “Dynamite” and “Golden” together in a viral moment that both leaders framed as symbolic of a more harmonious bilateral relationship. Photos and video of the jam session, held in matching outfits and shared on social media, were intended to convey personal rapport and public goodwill, even as substantive policy work continued the next day with temple visits and gift exchanges.

UN Sanctions Monitor Flags Systematic DPRK Cybercrime and IT Worker Evasion

A multilateral sanctions monitoring team (MSMT) composed of 11 countries—including the United States, South Korea, Japan, Australia and several European states—has released a report documenting extensive violations and evasions of United Nations sanctions by the Democratic People’s Republic of Korea (DPRK) through malicious cyber operations and overseas IT worker schemes. The report finds that Pyongyang’s state-linked cyber actors have conducted large-scale cryptocurrency thefts and laundering, stealing an estimated $2.8 billion between January 2024 and September 2025 by targeting exchanges and individual users, and have deployed networks of IT workers abroad to generate revenue and evade asset freezes mandated under UNSC resolutions. DPRK operators also routinely leverage fraudulent employment, identity laundering and international intermediaries to funnel funds back to state institutions tied to weapons and missile programmes.

North Korea has vocally condemned the MSMT’s activities and report, branding the multilateral effort as “illegal” and outside the United Nations system, despite the mechanism’s origin in response to Russia’s 2024 veto of the traditional UN expert panel on DPRK sanctions. Pyongyang’s dismissal reflects broader tensions over external scrutiny of its cyber and economic activities and complicates avenues for accountability.

Pakistan–Indonesia Defence Deal Nears Completion

Pakistan and Indonesia are finalising a landmark defence agreement that would see Islamabad supply JF-17 fighter jets and combat drones to Jakarta, according to sources familiar with the talks. The proposed deal, reportedly worth several billion dollars, would mark a significant deepening of military cooperation between the two states and underscore Pakistan’s growing role as a defence exporter. The JF-17 Block III, co-developed with China’s Chengdu Aircraft Corporation, is seen by Indonesian planners as a cost-effective platform to modernise its ageing combat fleet. The package may also include Wing Loong II or similar unmanned aerial systems, enhancing Indonesia’s surveillance and strike capabilities across its vast archipelagic territory.

The prospective agreement comes as Southeast Asian states increasingly diversify defence relationships amid geopolitical shifts and rising maritime and airspace challenges. For Pakistan, the deal would be a diplomatic and industrial boost, validating its defence industry’s export potential beyond traditional markets in the Middle East. For Indonesia, access to new platforms could help fill capability gaps more affordably than Western alternatives. However, the arrangement could attract scrutiny from India, which has tense ties with both Pakistan and China, and from Western capitals wary of expanding Chinese-linked military hardware proliferation. Final signatures and specifics—including financing terms, production offsets, and training arrangements—are expected only after formal approval by both governments.

U.S. Drives Allies to Strengthen Critical Mineral Supply Chains

The United States, through Treasury Secretary Scott Bessent, convened a meeting with G7 finance ministers and senior officials from allied and partner countries in Washington on January 12 to press for accelerated efforts to bolster critical mineral supply chain resiliency—especially for rare earths, lithium, cobalt, graphite and other materials vital for semiconductors, clean energy, and defence industries. Bessent emphasised reducing reliance on China, which currently dominates global processing and refining of many of these commodities, by diversifying sources, enhancing recycling, and building deeper international cooperation. The meeting underscored that supply chain vulnerability poses strategic and economic risks, and participants discussed financial incentives, shared standards and collective actions to make non-Chinese supply routes more commercially viable.

The push reflects rising urgency in the wake of Beijing’s tightening of export controls on rare earths and dual-use materials, which has stoked concerns among Western and Indo-Pacific partners about potential supply disruptions. Australia, Japan, South Korea and the EU have all signalled support for stronger cooperation, with initiatives ranging from strategic reserves to joint investment frameworks and expanded mining and processing capacity outside China. Analysts see this as part of a broader U.S. strategy to weave economic and security aims, strengthening alliances and reducing leverage that comes with concentrated control over critical mineral supply chains—a vulnerability exposed by recent market and policy shifts.

EU Sets Minimum Price Framework for Chinese EV Imports

The European Commission on January 12 issued detailed guidance outlining conditions under which Chinese electric vehicle makers can replace EU-imposed anti-subsidy tariffs with minimum price commitments on exports to the bloc. To be accepted, any offer must entirely eliminate the harmful effects of Chinese state subsidies, deliver an economic effect equivalent to current duties (which range up to ~35 %) and be practicable in execution. Brussels also wants proposals to minimise “cross-compensation” through other model lines and will consider Chinese EV investments in the EU as part of its evaluation. The guidance applies uniformly to all applicants in line with WTO rules and signals a structured, if stringent, pathway to resolving the longstanding trade dispute over heavily subsidised Chinese imports.

Beijing’s commerce ministry and Chinese industry groups have welcomed the guidance as a step toward a negotiated solution and stabilisation of China–EU trade ties, potentially easing friction after tariff imposition in 2024 and reflecting commitments from recent bilateral dialogue. Analysts say that while minimum prices could allow continued Chinese market presence without punitive duties, they may blunt the price advantage that Chinese brands have leveraged across Europe’s fast-growing EV market. This framework underscores Brussels’ effort to balance protection of the domestic auto industry with engagement over outright decoupling, even as Chinese EVs expand their footprint and competition intensifies.

Xi’s Anti-Corruption Campaign Tightens Focus on Senior Officials

China’s anti-corruption campaign under President Xi Jinping has intensified scrutiny of high-level misconduct, with state media highlighting recent investigations into former minister-rank officials accused of abuse of power, bribery and “serious discipline violations.” The official narrative frames these actions as a continuation of Xi’s signature governance priority—rooting out corruption at all levels without exemption—as part of efforts to reinforce Party discipline and public trust. The publicity around these cases, including detailed accounts of alleged breaches and disciplinary measures, signals Beijing’s desire to demonstrate the campaign’s reach across the bureaucracy and its ongoing political centrality more than a decade after its launch.

Observers see this renewed emphasis as serving multiple internal objectives: consolidating Xi’s authority within the Chinese Communist Party (CCP), deterring factionalism, and reinforcing control as economic headwinds and social discontent complicate governance. By foregrounding former senior officials’ alleged transgressions, state media helps shape public perceptions of accountability while subtly warning sitting cadres of political and legal consequences for deviation from Party directives. At the same time, analysts caution that the intensification of high-profile cases may reflect elite power dynamics as much as genuine anti-graft zeal, with selective targeting potentially instrumentalised to sideline rivals and unify leadership ahead of key policy or personnel transitions.

Taipei Hails Ottawa’s Support Ahead of Canadian Prime Minister’s China Visit

Taiwan President Lai publicly thanked Canada for its diplomatic backing amid recent Chinese military drills near the island, underscoring Ottawa’s statement opposing unilateral attempts to alter the status quo across the Taiwan Strait. Although Canada does not officially recognise Taiwan under its One-China policy, bilateral engagement has deepened in areas such as trade and technology, highlighted by a landmark investment agreement signed in 2023. Lai’s gratitude was expressed just days before Canadian Prime Minister Mark Carney travelled to Beijing for his first visit to China in nearly a decade, a trip focused on revitalising economic ties and discussing shared interests in trade and international security. Canada’s public support for Taiwan’s security and peaceful cross-strait relations positions Ottawa as a more assertive middle power voice in Indo-Pacific diplomacy at a time of heightened regional tensions.

Carney’s China visit—which also saw Canadian lawmakers curtail a Taiwan delegation to avoid diplomatic confusion—reflects Ottawa’s delicate balancing act between supporting democratic partners like Taiwan and pursuing pragmatic engagement with Beijing. The Canadian government’s nuanced approach aims to reassure Taipei of its concerns about regional stability while advancing its broader foreign policy objectives, including diversifying trade away from heavy reliance on the United States. This diplomatic choreography highlights the increasing complexity middle powers face as they navigate great power competition without fully aligning with any single bloc.

U.S. Hosts APEC Supply Chain Connectivity Roundtable in Mexico City

On January 13, the United States convened a regional roundtable of the APEC Alliance for Supply Chain Connectivity in Mexico City, gathering government officials from APEC economies alongside private-sector experts to focus on strengthening supply chain resilience and efficiency. The event built on momentum from the APEC 2025 Third Senior Officials Meeting in Incheon, where members prioritised expanding participation and private sector engagement in supply chain initiatives. Discussions emphasised digitalisation of trade and customs procedures, identifying best practices that economies can adapt domestically to enhance predictability, transparency and responsiveness in cross-border logistics. The U.S. framed the dialogue as part of its long-standing leadership within APEC to promote fair, secure and diverse supply chains that benefit businesses and consumers region-wide.

The roundtable underscored the increasing role of public-private coordination in operationalising digital trade tools and customs reforms—ranging from stakeholder engagement strategies to skills development crucial for implementation. U.S. officials and participants highlighted that resilient supply chains are critical amid ongoing global disruptions and geopolitical competition, particularly in high-tech sectors. By spotlighting digitalisation and connectivity, the meeting aimed to translate advisory consensus into actionable domestic policies, reinforcing APEC’s broader supply chain agenda ahead of future leadership and forum events.

Dutch Court Battle Over Nexperia Signals Intensifying Tech Governance Clash

Chinese-owned chipmaker Nexperia faced a legal challenge in a Dutch court on January 14 after a dispute erupted between its parent company, China’s Wingtech Technology, and the Netherlands’ government over control of Nexperia’s operations. The Dutch state sought to block the transfer of majority control from Nexperia’s current ownership structure to Wingtech, citing national security concerns tied to semiconductor supply chain vulnerabilities and the strategic importance of advanced chip production. The dispute underscores European anxieties about foreign investment in critical technology sectors—especially where Chinese capital is involved—and tests the limits of investment screening frameworks that have tightened across the EU and its partners in recent years.

The court case has broader implications for global semiconductor governance and China-Europe economic relations. The Netherlands is home to ASML, a keystone in the advanced chip manufacturing ecosystem, and has been especially cautious about foreign influence in its high-tech industries. While Wingtech and Nexperia argue that the transaction will support business continuity and competitiveness, Dutch authorities maintain that unchecked foreign control could compromise sensitive technologies and supply chain autonomy. The outcome will likely influence future foreign investment reviews in the tech sector across Europe, shaping how democracies balance openness to capital with strategic tech sovereignty.

India–U.S. Critical Minerals Dialogue Signals Strategic Economic Alignment

ndia has engaged in high-level talks with the United States on trade and critical minerals cooperation, as New Delhi pursues deeper integration into resilient supply chains amid global competition and geopolitical uncertainties. Indian Foreign Minister S. Jaishankar confirmed discussions with U.S. counterparts on enhancing trade ties and reducing dependencies in key sectors, particularly critical minerals vital for clean energy and technology supply chains. The dialogue reflects converging interests: the U.S. seeks diversified sources outside China, while India aims to attract investment and technology partnerships that bolster its industrial base and strategic autonomy. This initiative aligns with broader efforts, including India’s involvement in frameworks like the U.S.–India Commercial Dialogue and cooperation within the Quadrilateral Security Dialogue on economic and security aspects of supply chain diversification.

India’s push to diversify trade partners extends beyond the United States. New Delhi has been expanding economic ties with countries such as Iran, especially in energy and petrochemicals, though this has raised the spectre of potential U.S. tariff threats or sanctions pressure under evolving trade and national security considerations. According to local reporting, India’s strategy is to broaden export markets and resource inputs to reduce vulnerability to single-market shocks, even as it navigates complex geopolitical trade dynamics involving Western allies and regional partners.

Takaichi Weighs Snap Election Amid Political Calculus

Japanese PM Takaichi is considering calling a snap general election on February 8 according to media reports citing the ruling Liberal Democratic Party. Takaichi’s deliberations come against a backdrop of public discontent over economic stagnation, rising living costs and political fragmentation, with the LDP’s approval ratings showing vulnerability. An early election would be Takaichi’s first major test since assuming leadership and could serve to consolidate her mandate ahead of key policy initiatives, including defence spending reforms and economic revitalisation plans. Party strategists reportedly believe that a timely campaign could capitalise on organisational strength and pre-empt opposition momentum.

Political analysts describe Takaichi’s potential election call as a strategic gamble, balancing the opportunity to reset her administration with the risk of exacerbating voter fatigue and intra-party divisions. The opposition, including the Constitutional Democratic Party and other centre-left forces, has been urging dissolution of the lower house. Takaichi’s decision will also be shaped by external pressures, such as economic headwinds and security concerns amid China’s assertiveness, which she may frame to justify a renewed electoral mandate. Timing the election for early February could allow the LDP to mobilise its rural and conservative base before any deeper downturn in public sentiment.

Germany’s Merz Pushes to Accelerate India-EU Trade Deal and Deepen Strategic Ties

German Chancellor Merz, on his first official visit to India, pledged to fast-track negotiations on a comprehensive EU–India trade agreement, underscoring Berlin’s ambition to rekindle stalled talks and strengthen economic partnership with New Delhi. Merz reaffirmed Germany’s commitment to diversify trade and investment ties beyond China, emphasising sectors such as technology, manufacturing and clean energy. Indian and German business leaders also convened during the visit, where both sides highlighted opportunities for collaboration in semiconductors, EV supply chains and green hydrogen—sectors key to both countries’ industrial strategies. German support for expediting the EU-India deal signals a political push to balance China-centric supply dependencies and tap India’s large market and innovation ecosystem.

Beyond economics, Merz and India’s leadership agreed to enhance security cooperation, including efforts to reduce dependence on Russian military equipment—a pivot that aligns with broader Western concerns about Russia’s role in regional stability. Berlin’s outreach blends economic incentives with strategic alignment, including dialogues on defence industry collaboration, interoperable technologies, and joint exercises. New Delhi, while maintaining its longstanding strategic autonomy, responded positively to these overtures, viewing stronger ties with Germany and the EU as a counterweight to great-power competition in the Indo-Pacific.

U.S.–Taiwan Trade Deal Nears Completion with Semiconductor Focus

The United States and Taiwan are closing in on a trade agreement that would lower tariffs and bolster cooperation in semiconductors and advanced technologies, marking a significant step in economic and strategic ties amid growing competition with China. Reuters reports that negotiators have reached substantial preliminary agreement, with details expected to be finalised soon, and have already begun lowering some tariffs as part of phased implementation. The deal is aimed at reinforcing supply chain resilience for critical tech components—particularly benefiting TSMC and its expanding U.S. facilities—by making it cheaper for Taiwanese firms to export to American markets while enhancing reciprocal investment protections.

Beyond tariff reductions, Taiwan seeks to frame the agreement as a platform for strategic collaboration in artificial intelligence (AI) and other frontier technologies, aiming to align economic integration with shared innovation and security objectives. The U.S. Commerce Department has affirmed that the emerging deal will focus on semiconductors, indicating a targeted approach rather than a broad free-trade pact, tailored to sectors where supply chain vulnerabilities are most acute. This targeted trade cooperation is part of broader U.S. policy to deepen ties with democracies in the Indo-Pacific and reduce technological dependence on China, while giving Taipei greater leverage in shaping regional economic architecture without formal diplomatic recognition.

U.S. Tariffs on Advanced Chips Signal Industrial Policy Shift

U.S. President Trump announced on January 14 new 25 % tariffs on certain advanced computing chips, part of an economic strategy aimed at supporting domestic semiconductor production and protecting key technologies from foreign competition. The levies target high-end chips used in artificial intelligence and data centres—segments of the industry seen as crucial to national competitiveness. The move comes amid bipartisan concern in Washington about maintaining U.S. technological leadership and reducing dependence on foreign semiconductor supply chains, particularly in light of strained relations with China. While the tariffs are intended to incentivise onshore investment and capacity expansion, they also risk increasing costs for U.S. tech companies and provoking retaliatory measures from trading partners.

At the same press event, Trump addressed the issue of critical minerals, clarifying that he would not impose new tariffs on imports of such materials “for now.” Instead, he reiterated a commitment to diversify supply sources overseas and reduce reliance on China’s dominant position in processing and refining rare earths and related minerals. The approach reflects a broader industrial policy that pairs targeted protectionism with efforts to secure supply chains through strategic partnerships and investment in alternative sources.

Taiwan Signals Additional U.S. Arms Sales as Cross-Strait Tensions Persist

Taiwan has indicated that multiple additional U.S. arms sales packages are in the pipeline, with four deals pending formal notification to the U.S. Congress, according to Vice Defence Minister Hsu Szu-chien. The announcement follows December’s record $11 billion arms package, which included advanced systems such as HIMARS rocket artillery and Altius loitering munitions, reinforcing Taipei’s asymmetric defence posture. While Hsu declined to detail the content of the pending notifications for legal reasons, the acknowledgement itself reflects ongoing military cooperation between Washington and Taipei despite the lack of formal diplomatic ties.

The escalation in arms supply discussions comes amid rising People’s Republic of China (PRC) military pressure, including war games around Taiwan following the previous package’s announcement. Taipei has concurrently moved to significantly boost its defence budget with a proposed NT$1.25 trillion (~$40 billion) allocation through 2033, though legislative approval has stalled amid domestic political pushback. China’s sovereignty claim over Taiwan and its objections to U.S. arms sales continue to frame the geopolitical context, underscoring how Taipei’s pursuit of advanced U.S. weaponry both responds to perceived threats and deepens strategic alignment with Washington.

Carney’s Beijing Visit Signals Cautious Reset in Canada–China Relations

Canadian Prime Minister Mark Carney travelled to Beijing in mid-January for the first Canadian leader-level visit to China in nearly a decade, seeking to stabilise relations after years of diplomatic freeze marked by detentions, trade disputes and mutual mistrust. In meetings with President Xi Jinping and senior Chinese officials, both sides agreed to reopen high-level dialogue channels, resume economic and trade consultations, and explore cooperation in areas such as climate finance, energy transition and agri-food trade. Beijing framed the visit as an opportunity to “turn the page,” while Ottawa stressed pragmatic engagement without abandoning concerns over security, human rights and rule-of-law issues.

The trip reflects a strategic recalibration in Ottawa amid uncertainty in its economic relationship with the United States, particularly under renewed trade pressure from Washington. Canadian officials emphasised diversification rather than realignment, portraying China engagement as risk-managed and selective rather than a wholesale reset. Analysts note the diplomatic choreography underscores the complexity of Canada–China ties: economic interdependence remains significant, but political trust is thin. Carney’s visit lowers the temperature and restores basic diplomatic functionality, yet structural tensions—over Taiwan, technology, and national security—are likely to cap how far rapprochement can realistically go.

U.S. Blockade Threatens Venezuelan Oil Flows to China

Venezuelan oil exports to China are set to plummet from February 2026 after a U.S. maritime blockade sharply limited tanker departures from Venezuelan ports, according to traders and analysts. Since mid-December, only a handful of tankers—carrying roughly 5 million barrels of crude and fuel oil—have reached or remained en route to China, compared with an average of about 642,000 barrels per day in 2025. The decline stems from U.S. enforcement measures targeting sanctioned oil shipments linked to Venezuela following heightened political and security actions against the Maduro government, prompting many vessels to turn back or obscure their movements to avoid seizure.

The disruption carries implications for Chinese buyers, particularly independent refiners that traditionally relied on Venezuelan heavy crude, even though Beijing stocks substantial reserves and can source alternatives. Reduced Venezuelan supply may push refiners toward other heavy grades or Western suppliers, while the blockade coincides with U.S. moves to redirect some Venezuelan crude toward U.S. Gulf Coast refiners under expanded U.S. licences. For Caracas, oil export constraints add to production and logistical pressures, reinforcing how geopolitical friction over energy access now intersects with great-power competition and supply-chain realignments in global crude markets.

China–Russia Trade Contracts for First Time in Five Years

China’s total trade volume with Russia fell in 2025, marking the first annual decline in five years as bilateral commerce shrank by about 4.8% to $240 billion. Exports from China to Russia dipped modestly, while Chinese imports of Russian energy and commodities saw a sharper drop, driven by weaker global demand, logistical hurdles and diversification of Russian energy flows toward other buyers. The contraction interrupts a persistent upward trajectory that had been propelled by expanding energy, machinery and manufactured goods exchanges since 2020, and underscores the limits of economic cooperation that is increasingly shaped by geopolitical pressures and macroeconomic headwinds.

Analysts attribute the slowdown to multiple factors: slower Russian oil output, China’s slowing domestic growth reducing demand for imports, and Western sanctions that complicate finance and transport links. While both capitals continue to describe the relationship as a “comprehensive strategic partnership,” the trade dip highlights structural constraints in forging deeper economic integration under geopolitical stress. For Russia, diminished Chinese demand for energy and goods could prompt further efforts to pivot toward South and Southeast Asian markets, while China may accelerate its own efforts to diversify supply sources and insulate key sectors from bilateral volatility.

U.S.–Australia Défense Dialogue Reinforces Indo-Pacific Security Cooperation

Deputy Secretary of State Christopher Landau met with Australian Secretary of Defence Greg Moriarty in Washington on January 15, 2026, reaffirming a shared commitment to deepen bilateral defence cooperation and reinforce stability in the Indo-Pacific region. During the talks, Landau welcomed Australia’s recent contributions to regional security, including its expanded defence engagement with Papua New Guinea and enhanced ties with Indonesia, and both officials exchanged views on collaborative approaches to engaging with Pacific Island countries on security and development issues. The meeting built on momentum from the December 2025 U.S.–Australia ministerial dialogue (AUSMIN), reflecting enduring alliance management amid evolving geopolitical competition.

The discussion highlights the centrality of the U.S.–Australia alliance—anchored in decades of formal defence cooperation and strategic alignment—to broader Indo-Pacific security architectures. Officials emphasised the importance of coordinating on force posture, interoperability, and joint planning, underscoring how bilateral dialogue complements wider frameworks like AUKUS and other multilateral mechanisms aimed at deterring coercion and preserving a “free and open” regional order. This reaffirmation of ties at senior levels signals continuity in both capitals’ approaches to shared threats, even as Australia navigates its own strategic priorities and evolving defence partnerships.

India Nears Landmark Trade Deal with EU After Protracted Talks

India and the European Union are reportedly close to concluding a long-sought trade agreement, with India’s top trade official signalling that negotiators have “covered almost all issues” and are working through final sticking points. The discussions have focused on tariffs, market access, rules of origin, and regulatory cooperation, as both sides seek a deal that could significantly boost two-way trade—currently valued at around €130 billion—and strengthen strategic economic ties. For India, the agreement represents a major diversification of export destinations beyond traditional markets, while the EU aims to secure better access for industrial and agricultural goods amid intensifying global competition.

A comprehensive trade deal is expected to lower duties on key Indian exports such as textiles, pharmaceuticals and IT services, while offering European manufacturers improved access to India’s fast-growing market. Beyond economics, the pact would carry geopolitical weight, aligning two major democracies at a time when supply chains and trade alliances are being reshaped by geopolitical competition, especially with China’s expanding economic footprint. Observers view the imminent agreement as a potential catalyst for broader cooperation on standards, sustainable development, and investment, though final ratification will hinge on sensitive domestic political considerations on both sides.

U.S. Tariff Threat Clouds India’s Iran-Linked Trade Diversification Strategy

India’s effort to diversify trade routes and deepen economic links with Iran—particularly through projects like the strategic Chabahar Port—is facing fresh headwinds from a U.S. threat to impose 25 % tariffs on any country that continues business with Tehran. The proposed levy, announced by U.S. President Donald Trump, aims to pressure countries trading with Iran amid wider geopolitical tensions and internal unrest in the Islamic Republic. Indian exporters, especially in sectors such as basmati rice and pharmaceuticals, have already seen shipments slow or stall due to worries about non-payment from Iranian buyers and the risk of U.S. tariffs, dampening momentum in bilateral commerce. The looming penalty also jeopardises India’s use of Chabahar as a gateway to Afghanistan, Central Asia and Europe, a key component of New Delhi’s trade diversification and connectivity strategy.

While trade with Iran accounts for a relatively small share of India’s total exports (around 0.3 %), the tariff threat complicates broader economic and geopolitical calculations. New Delhi secured a temporary U.S. sanctions waiver for Chabahar’s development through April, but its future is uncertain, raising questions about the long-term viability of India’s regional connectivity ambitions. Government sources argue that the overall direct impact of the tariff may be limited given modest bilateral volumes, but exporters remain cautious, and the spectre of punitive duties adds pressure on an already fragile trading relationship with Tehran.

Tokyo–Manila Deepen Defence Ties with Cross-Servicing Pact

Japan and the Philippines signed two new security agreements in Manila on January 15, marking a tangible deepening of military cooperation amid rising regional tensions, particularly linked to China’s assertiveness in the South China Sea and wider Indo-Pacific strategic competition. One key accord is an Acquisition and Cross-Servicing Agreement, which enables the tax-free exchange of ammunition, fuel, food and other supplies between the Japanese Self-Défense Forces and the Armed Forces of the Philippines during joint training and operations, enhancing logistical interoperability and readiness. The agreements build on the Reciprocal Access Agreement—ratified in 2025—which already allows forces from both sides to operate on each other’s territory for exercises and disaster-response missions. Tokyo also announced $6 million in official security assistance to support infrastructure for Philippines naval assets.

Officials from both governments framed the pacts as part of a broader shared commitment to uphold freedom of navigation and the rule of law, implicitly countering unilateral attempts to alter maritime status quos in contested waters. The timing of the agreements—while the Philippines holds the ASEAN chair and as tensions persist around Taiwan—reflects Manila’s and Tokyo’s growing alignment with U.S. alliance frameworks and trilateral cooperation, without formal mutual defence obligations.

Pakistan, Saudi Arabia and Türkiye Advance Trilateral Defence Cooperation

Pakistan’s defence minister on January 15 confirmed that Islamabad, Saudi Arabia and Türkiye are moving toward a trilateral defence cooperation framework that could include joint military exercises, technology transfer and coordinated defence production. The announcement followed talks with Saudi and Turkish counterparts in Riyadh, where Pakistan emphasised shared security interests and the strategic importance of deepening ties amid evolving regional dynamics. While details on specific programmes and timelines remain limited, Pakistani officials framed the initiative as expanding beyond bilateral arrangements to cultivate a more structured partnership that leverages the military capabilities and geopolitical influence of all three states.

The emerging pact reflects a broader realignment in the Muslim world’s defence architecture, occurring alongside other strategic partnerships such as the Türkiye–Saudi coordination council and Pakistan’s own engagements with China and Gulf states. Analysts see the trilateral move as an attempt to balance regional influence against both Western alliances and rival blocs, providing each partner with diplomatic and military options amid tensions in the Middle East, South Asia and Eastern Mediterranean. For Pakistan, closer defence ties with Riyadh and Ankara may help sustain crucial economic and remittance links with Gulf partners, while Türkiye strengthens its role as a security provider beyond NATO, and Saudi Arabia diversifies its defence partnerships in response to regional threats and shifting U.S. focus.