Weekly Outlook: Asia on the Horizon

Albanese Reaffirms AUKUS Commitment Amid Trump Meeting Fallout

Australian Prime Minister Anthony Albanese has reiterated Canberra’s unwavering support for the AUKUS security pact ahead of—and despite the cancellation of—his scheduled meeting with U.S. President Donald Trump during the G7 summit in Canada. Albanese had planned to press Trump on expediting the trilateral submarine deal, emphasizing that boosting Australia’s nuclear-powered fleet is critical to regional stability and aligned with U.S. strategic priorities in the Indo-Pacific. While facing domestic calls to raise defense spending above the current 2.3% of GDP, he affirmed Australia would meet its AUKUS obligations—including financial contributions to joint production, maintenance access at Darwin, and integrated fleet operations. He also signaled intentions to discuss U.S. steel and aluminum tariffs affecting Australian exports—embedding AUKUS within a broader economic-security framework.

Following the summit, Albanese expressed confidence that AUKUS remains on track, bolstered by U.K. Prime Minister Keir Starmer’s assurance that “we’re proceeding with that, it’s a really important deal.” Despite Trump’s ongoing Pentagon-led review of the pact under an “America First” lens, Albanese described the trilateral alliance as a “great advantage” for all three countries. His remarks sought to dispel uncertainty surrounding the multibillion-dollar submarine partnership and reaffirm Australia’s strategic alignment with Washington and London amid China’s growing assertiveness in the region.

Modi Advances India–Cyprus Trade and Strategic Corridor Goals

During his first visit to Cyprus in over two decades on June 15–16, 2025, Prime Minister Narendra Modi underscored India’s commitment to the India–Middle East–Europe Economic Corridor (IMEC), pitching Cyprus as the strategic gateway to Europe. Speaking alongside President Nikos Christodoulides, Modi highlighted Cyprus’s geographic advantage and its role in enhancing sea and rail connectivity, framing IMEC as a potential catalyst for regional peace and prosperity amid rising Middle Eastern tensions. He also announced India’s expectation of a finalized free‑trade agreement with the EU by the end of 2025, with Cyprus pledging backing during its EU presidency in early 2026 .

Beyond trade ambitions, Modi and Christodoulides signed multiple accords to strengthen bilateral defense, maritime, cybersecurity, and anti‑terror cooperation. These included an information‑sharing mechanism, increased Indian naval visits, joint training, and trilateral business collaborations with Greece to deepen economic engagement. Modi also received Cyprus’s highest civilian honour, the Grand Cross of the Order of Makarios III, symbolizing a deepening of historical and cultural ties between the two democracies.

Vietnam Joins BRICS as 10th Partner Nation to Deepen South–South Ties

Vietnam has officially been accepted as the 10th “partner country” of the BRICS bloc, following a decision by the Brazilian presidency in 2025. This new status grants Hanoi access to BRICS summits and policy discussions, reflecting its growing role in global South diplomacy. Brazil’s statement praised Vietnam’s alignment with BRICS priorities—South–South cooperation and sustainable development—and underscored its emergence as “a relevant actor in Asia”.

Vietnam’s inclusion signifies a strategic pivot in its foreign policy to diversify international partnerships and increase its influence amid great-power competition. The partner country category, introduced during the 2024 summit in Kazan, positions Vietnam alongside nations like Belarus, Malaysia, Nigeria, and Thailand. Analysts note that this status underlines Hanoi’s preference for multilateral engagement over aligning solely with Western-led structures—allowing Vietnam to hedge its bets in a multipolar world

EU and Trump Align on China Rivalries, Spotlight Transatlantic Tensions

At the G7 summit in Canada, European Commission President Ursula von der Leyen took a bold diplomatic approach, publicly aligning with former President Donald Trump over a shared concern about China’s strategic use of critical raw materials. She stated, “Donald is right” in warning against China weaponizing its dominance in minerals essential for green technologies—a rare moment of solidarity amidst broader transatlantic friction. Von der Leyen framed this stance as a jointly embraced challenge, saying both sides would “accelerate their work” toward a fair trade deal, even as they remain locked into high-stakes tariff negotiations.

This brief diplomatic convergence, however, masks deeper tensions. The EU is grappling with Trump’s looming threat of sweeping tariffs—up to 50% on European exports—a deadline set for July 9 if no deal materializes . Although Brussels has proposed measures such as a unified flat tariff and enhanced defense collaboration with the U.S., von der Leyen’s endorsement of Trump on China fails to ease pressure on trade. Instead, it offers a narrow opportunity for compromise on strategic issues even as the broader transatlantic relationship remains strained over economic security policy and defense burden‑sharing .

Philippines and Japan Strengthen Ties with Post‑RAA Joint Naval Drills

Following the December 2024 ratification of the Reciprocal Access Agreement (RAA), the Philippines and Japan conducted one of their first major maritime exercises in the West Philippine Sea this past weekend, marking a significant escalation in bilateral defense cooperation. The drills come on the heels of the RAA—a treaty enabling mutual deployment and military exercises on each other’s territory—which analysts view as a strategic response to increasing regional assertiveness, notably from China. Manila’s Senate unanimously approved the pact on December 16, 2024, followed by Japan’s Diet approval on June 6, 2025, setting the stage for this first round of operational collaboration.

The weekend drills, conducted under the RAA framework, highlight both nations’ intent to deepen interoperability and joint readiness, reinforcing a de facto “quasi‑alliance” amid shared security concerns. The exercises served not only to operationalize the RAA’s provisions but also to send a strategic signal in the South China Sea—where Philippines–China tensions have recently spiked. Philippine observers and defense experts characterize these drills as a tangible demonstration of trust built through late-night negotiations and rapid ratifications—and as a milestone in Tokyo–Manila security ties designed to uphold a free and open regional order

Shoigu’s Sixth Visit Marks Deepening Russia–North Korea Security Nexus

Russian Security Council Secretary Sergei Shoigu made his third trip to Pyongyang in under three months on June 17, 2025, reportedly acting on “special instructions” from President Vladimir Putin. During his visit, he met with North Korean leader Kim Jong Un to follow up on agreements stemming from their comprehensive strategic partnership treaty signed last year. The discussions centered on implementing mutual-defense commitments, with both governments expressing intent to solidify cooperation in security and military affairs.

Notably, Shoigu announced North Korea’s deployment of approximately 6,000 personnel to Russia’s Kursk region—1,000 sappers and 5,000 construction workers—to aid in post-conflict rebuilding efforts following Ukraine’s incursion. These troops include North Korean combat engineers who allegedly helped repel Ukrainian forces in the region earlier this year. Shoigu also revealed plans to honor North Korean soldiers who suffered casualties during these operations with memorials in both countries, underscoring the extent of this growing alliance. The visit highlights an escalating military-technical relationship that has drawn concern from South Korea, Western governments, and UN sanctions enforcers due to its implications for regional security and sanctions compliance.

China and Central Asia Cement ‘Permanent Good‑Neighbourliness’ Treaty to Boost Connectivity

At the Second China–Central Asia Summit held June 16–18 in Astana, Kazakhstan, President Xi Jinping signed a landmark treaty of “permanent good‑neighbourliness and friendly cooperation” alongside leaders from Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. This pact enshrines a long-standing diplomatic framework into law and launches a broad agenda to enhance regional connectivity—bolstering rail and road links, increasing direct flights, streamlining visa regimes, and modernizing port infrastructure—with China exploring new consular platforms in the region. Reuters reports highlight commitments to open more direct air routes, upgrade transport corridors, and coordinate visa policies to foster trade, energy, and infrastructure integration.

Xi’s announcement included pledging ¥1.5 billion in grant aid and championing an accelerated China‑Kyrgyzstan‑Uzbekistan rail link, geared toward bypassing Russia and cutting transit times to Europe. The treaty also expands cooperation into green energy, justice, security, and cultural exchange. Initiatives include anti‑terror and cybersecurity cooperation, parliamentary and media partnerships, and the establishment of cooperation centers in Astana. Chinese state narratives emphasize a “China‑Central Asia Spirit” based on mutual trust and equitable multipolarism—signifying a strategic pivot to deepen influence across what has traditionally been a Russian-dominated periphery.

Modi Declares “Bullets with Shells” in Call Rejecting US as Mediator

Indian Prime Minister Narendra Modi conveyed a forceful message to former U.S. President Donald Trump during their 35-minute phone call on June 18, 2025. He reaffirmed that India’s Operation Sindoor, initiated in response to the April 22 Pahalgam terror attack, is an ongoing, non-escalatory yet decisive campaign targeting terrorist infrastructure in Pakistan and Pakistan-occupied Kashmir. Modi bluntly stated that India “will respond to Pakistan’s bullets with shells,” and emphasized that any pause in hostilities resulted solely from direct military-to-military communications—rejecting Trump’s repeated claims that the U.S. brokered a ceasefire.

Modi made clear that New Delhi “has never accepted mediation, does not, and will never do so,” underscoring India’s preference for bilateral mechanisms over third-party involvement. He also dispelled Trump’s suggestion of linkage between the military pause and an India–U.S. trade deal, stating no such discussions took place during the conflict. Modi took the opportunity to invite Trump to the upcoming Quad summit in India—a proposal Trump accepted—and the two leaders agreed to engage in further high-level dialogue on regional security issues including the Indo-Pacific and the Russia–Ukraine conflict

Ishiba Flags Persistent Tensions in US–Japan Tariff Talks

Japanese Prime Minister Shigeru Ishiba emphasized after the G7 summit in Calgary on June 18, 2025, that Tokyo and Washington have yet to reach a comprehensive trade agreement, with significant disagreements enduring particularly over U.S. auto tariffs. Despite sincere and detailed discussions—including a 30-minute face-to-face meeting with President Trump—no breakthrough emerged on suspending or reducing the 25% tariff on Japanese automobile imports and the broader 24% “reciprocal” tariffs set to take effect in July. Ishiba stressed that negotiations persisted “until the last moment,” driven by Japan’s commitment to protecting its national economic interests, though key sticking points remain unresolved.

The impasse is already impacting Japan’s economy. In May 2025, exports fell by 1.7% year-on-year—the first decline in eight months—led by a sharp 24.7% slump in U.S.-bound auto shipments, although automakers largely absorbed the cost to maintain competitiveness. With a July 9 deadline looming before tariffs fully apply, Japan faces mounting pressure: economists warn that continued duties could shave up to 1% off GDP, and the political fallout may affect Ishiba’s standing ahead of the July upper-house elections. Tokyo is now bracing for intensified negotiations at upcoming forums, including the NATO summit in the Netherlands later this month.

Lee and Ishiba Pledge Closer Cooperation Amid Trade Headwinds

South Korean President Lee Jae‑Myung and Japanese Prime Minister Shigeru Ishiba met on the sidelines of the G7 summit in Calgary on June 17, 2025, signaling a strategic reset in Seoul–Tokyo relations. Lee described their relationship as “inseparable,” likening their countries to neighbors “sharing the same front yard,” and underscored the importance of future‑oriented cooperation amid global trade volatility. Ishiba echoed this sentiment, affirming that trilateral collaboration with the U.S. remains vital in the current strategic environment and extending the dialogue to economic challenges—including facing U.S. reciprocal tariffs.

Both leaders acknowledged mounting trade pressures, with Lee calling on Japan to join forces in countering U.S.-imposed duties, which threaten sectors like autos and chips critical to their export‑driven economies. Lee’s administration is accelerating working-level negotiations with Washington to minimize tariff impacts, while Ishiba has mobilized a government-wide response to what he describes as a “national crisis” over looming U.S. auto tariffs. Their joint commitment at Calgary reflects a pragmatic shift—from historical friction toward mutual economic resilience and security alignment in the Indo‑Pacific.

Historic White House Lunch Deepens U.S.–Pakistan Rapprochement

On June 18, 2025, President Donald Trump hosted Pakistani Army Chief Field Marshal Asim Munir for a one-on-one lunch at the White House—marking an unprecedented meeting without civilian officials present. Trump lauded Munir’s role in helping defuse the recent India–Pakistan conflict, stating their efforts alongside Indian Prime Minister Modi had prevented a potential nuclear war. The gathering also touched on broader regional security concerns, including Iran, while underlining Trump’s pivot to strongman engagement and reviving ties that had cooled in recent years.

Trump’s assertion that U.S. mediation helped end hostilities is staunchly rejected by India, with PM Modi reiterating that the ceasefire resulted from direct military-to-military talks—emphasizing India’s long-standing policy against third-party intervention. Meanwhile, Pakistan’s military has welcomed the U.S. involvement, with officials even proposing to nominate Trump for a Nobel Peace Prize—underscoring Islamabad’s gratitude and signaling its diplomatic resurgence. The meeting sharpens U.S.–India tensions and highlights South Asia’s shifting strategic fault lines, as Washington seeks to balance its relationships with both nuclear-armed nations.

Putin and Xi Condemn Israeli Strikes on Iran, Urge Diplomatic Solution

Russian President Vladimir Putin and Chinese President Xi Jinping jointly denounced Israel’s military strikes on Iran in a June 19 phone call, expressing “strong” condemnation of actions that they say violate the UN Charter and international law. Kremlin aide Yuri Ushakov confirmed that both leaders agreed that the use of force against Iran’s nuclear facilities is counterproductive and that a diplomatic pathway is the only viable solution to address regional tensions.

They also agreed to remain in close communication in the coming days and voiced support for potential Russian mediation—a strategy Xi believes could help de-escalate the conflict. This joint stance underscores Beijing and Moscow’s efforts to position themselves as responsible global actors and offers a rare display of cohesive Sino-Russian diplomacy amid escalating NATO and Western involvement in the Middle East.

Luxon Seeks Closer Economic Bonds and Pacific Stability in Beijing Talks

New Zealand Prime Minister Christopher Luxon, on his first visit to China since taking office in November 2023, met President Xi Jinping at Beijing’s Great Hall of the People on June 20, 2025, to reinforce bilateral trade and address regional security concerns. With China remaining New Zealand’s largest trading partner—2024 exports reached NZ$20.85 billion—Luxon emphasized boosting cooperation in education, tourism, infrastructure, and science & technology. Concrete agreements included expanded flights with China Eastern and a trial visa-waiver program from November to facilitate visitor and student mobility. These moves align with New Zealand’s broader Pacific engagement and support for Pacific Islands Forum-led initiatives.

Despite economic warmth, Luxon also introduced messages of caution amid growing geopolitical complexity in the Indo‑Pacific. He underscored the importance of peace and stability, referencing tensions stemming from China’s military activities in the Pacific and recent diplomatic friction over the Cook Islands’ new China-style agreements, which prompted a temporary aid suspension by Wellington. Xi countered by urging mutual respect and accurate handling of differences, noting that no fundamental conflicts exist between the two nations. The meeting thus balanced reinforcing economic ties with cautious alignment on security matters—a testament to New Zealand’s nuanced diplomacy amid intensifying U.S.–China competition.

Kunming Trilateral Signals New South-South Axis

China hosted senior officials from Pakistan and Bangladesh in Kunming on June 20 for the first China-Pakistan-Bangladesh Trilateral Summit, chaired by Vice-Foreign Minister Sun Weidong. Acting Bangladeshi Foreign Secretary Ruhul Alam Siddique and Pakistan’s Additional Secretary Imran Ahmed Siddiqui attended in person, with Foreign Secretary Amna Baloch joining virtually. The three sides adopted principles of “good-neighborliness, equality, mutual trust, openness and inclusiveness” and agreed to launch a follow-up working group to translate plans into joint projects across trade, industry, maritime logistics, water management, agriculture, climate action, health, education and think-tank exchanges—insisting the framework is “not directed at any third party.”

Regional analysts see the Kunming format as the latest step in Beijing’s effort to knit India’s neighbours more tightly into its orbit—coming just weeks after a similar China-Pakistan-Afghanistan dialogue and raising talk of an “eastern spur” to the China-Pakistan Economic Corridor. Indian media note Dhaka’s interim leadership is quietly expanding security contacts with both Beijing and Islamabad, prompting concerns that China is “ring-fencing” India with overlapping economic and strategic corridors. Although the summit’s communique emphasised “true multilateralism,” the working-group mechanism gives China a new channel to deepen influence in South Asia’s Bay-of-Bengal rim while reinforcing its long-standing partnership with Pakistan.

U.S. Moves to Restrict Allied Chipmakers’ China Operations

The U.S. Commerce Department is reportedly preparing to revoke blanket waivers that allow major foreign semiconductor firms—Samsung Electronics, SK Hynix, and TSMC—to freely use U.S.-origin equipment in their Chinese plants. Jeffrey Kessler, Under Secretary for Industry and Security, has informed these companies that such waivers will be terminated, shifting toward a stricter licensing regime similar to the one applied to China’s use of rare-earth minerals. While U.S. officials emphasize this policy is about “ensur[ing] equal and reciprocal” regulatory treatment rather than outright bans, the move would significantly raise red tape for overseas operations—and signals renewed export-control pressure from Washington under Trump-era national security priorities.

The anticipated policy will strain relations with South Korea and Taiwan, whose semiconductor giants rely heavily on Chinese plants for memory and logic chips in automotive and consumer markets. U.S. equipment suppliers like KLA, Lam Research, and Applied Materials already saw stock declines on the news. Industry insiders warn that, while short-term shutdowns are unlikely, long-term operational complications are probable—and firms may turn to Japanese or European suppliers or seek case-by-case licensing. This move comes amid broader U.S.–China trade tensions and a delicate détente agreed in London, raising questions about the future alignment of allies within Washington’s tech-security agenda.