US-CHINA RIVALRY THREATENS ASIA-PACIFIC STABILITY

Intensifying US-China competition dominates Asia-Pacific geopolitics in 2026, with both powers vying for control over critical maritime routes like the Malacca Strait, Taiwan Strait, and South China Sea chokepoints. The US bolsters alliances with Japan, South Korea, Philippines, and Taiwan to counter China's militarization of disputed islands including Senkaku, Spratly, and Paracel. A potential Taiwan crisis, sparked by naval incidents, risks global supply chain disruptions, especially semiconductors, and could slash EU GDP by 1%. Trade shifts see ASEAN emerge as a manufacturing hub amid US-China decoupling, while Japan expands arms exports and security roles, heightening regional tensions.