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A question of intent

In 2021, we tracked growing incidences of political arrests, pushes to implement and enforce laws that erode user privacy and enable greater censorship, and an overall rise in autocratic styles of governance in at least six or seven countries.

The potential for instability in China

There are three key areas of uncertainty that may prove significant in how China acts in 2022. These reflect the country’s growing exposure to threats and risks as a result of regional and global overexpansion. They also reflect the rapid and sweeping changes in how China is governed under the leadership of President Xi Jinping. All have the potential to take the country off course should Mr Xi push too hard, too fast and too far.

The first is that it is unclear to what extent and for how long the Chinese government is able to fend off structural economic pressures and a potential slowdown. This is likely to be among the president's main priorities as major economic instability would challenge the Chinese Communist Party’s (CCP) legitimacy and probably translate into wider societal discontent. Some key threats would be sanctions and other measures targeting Chinese exports, and ongoing disruption to global supply chains. Such outcomes would almost certainly result should Beijing aggressively violate international law in the South and East China seas, and particularly if it were to attack Taiwan. 

The second uncertainty is the extent to which the centralisation of power under President Xi and his personality cult have created governance vulnerabilities and decision risks. Mr Xi exercises direct control over many aspects of bureaucracy and policy making. But it is unclear what impact this is having on the quality of governance and the extent to which policies are open to challenge. All this raises questions about the ability of the government to avoid major crises and manage them soundly when they occur. 

The third uncertainty is tied to the other two and points to the greater near-term risk. These are the uncertain consequences arising from Mr Xi’s signature ambitions to aggressively accelerate China to global high-tech superpower status by 2025. The riskiest aspect of that strategy is militarily forcing the resolution of its territorial claims in Asia, particularly over Taiwan.  

The economic fallout risks to China suggest that a military conflict over Taiwan is a very unlikely scenario in 2022. It probably serves Beijing well for the world to fear otherwise to achieve its goal without resorting to war. But taking control of the island is probably not an outcome Mr Xi can delay indefinitely given the political capital he has attached to it. And there is more than an outside chance that Beijing will take some type of overt action in 2022 to test US resolve and intimidate Taiwan. 

Such actions might include the seizure of outlying islands, missile tests or intensified military exercises and territorial incursions. But the most likely scenario in 2022 remains the ongoing use of covert ‘grey zone’ strategies and tactics – particularly cyber warfare, coercive diplomacy, paramilitary activity, propaganda and aggressive intelligence efforts – to discourage Taiwan and others from promoting or facilitating the island’s self-sufficiency. In grey zones or otherwise, this is still a strategy fraught with risk for China if events are misread, misjudged and mishandled.

The North Korean headache

The potential of other crises emerging in the region is one important factor that could change Beijing’s calculus when it comes to its strategic goal of Taiwanese unification, and how it manages competition with the US. Due to its economic and military footprint, China is now the geopolitical centre of gravity in the region. And thus it is required to respond to any security developments that impact its regional assets and interests. 

One key source of strategic risk for China is North Korea, which also represents another crisis flashpoint to watch in 2022. Pyongyang is likely to continue to refuse to engage substantially with the US in 2022, despite probable overtures from South Korea to do so. In 2021, North Korea restarted cruise and ballistic missile testing and reactivated its primary nuclear reactor in Yongbyon. Further missile tests are likely, and nuclear tests are possible, in 2022. All of which would pose serious threats to the security of South Korea and Japan.

There are scant prospects for a denuclearisation of North Korea. And the US has few good options to deal with a new crisis on the Korean peninsula that seems all but inevitable at some point in the not too distant future. As North Korea sinks deeper into humanitarian and economic collapse, the regime’s nuclear capability affords it cover to stage provocations in a bid to ease sanctions and gain economic concessions. China is more able to exert pressure on North Korea by withholding energy supplies as it did in 2013 and 2014, but it is unlikely to step in and assist in a crisis given wider geopolitical agendas. 

Indeed, Beijing’s primary strategic objective almost certainly remains averting a collapse of the regime in Pyongyang and the attendant instability and refugee crisis on its border that would follow. Such a scenario is an outlier but with so little known about the situation in North Korea during the pandemic, or indeed of Kim Jong-Un’s health, it may be a far more near term risk than it seems. And one that Beijing can probably ill afford to let materialise.

Authoritarianism and instability

At a broader regional level a key shift we anticipate shaping the Asia Pacific region in 2022 is growing authoritarianism in Southeast Asia. As the region attempts to pull away from the impacts of the Covid-19 pandemic, several governments have doubled down on controlling policies and curtailing democracy. In 2021, we tracked growing incidences of political arrests, pushes to implement and enforce laws that erode user privacy and enable greater censorship, and an overall rise in autocratic styles of governance in at least six or seven countries. 

This authoritarian shift has been notably observable in Thailand, Cambodia, China, Hong Kong, Laos, Myanmar and the Philippines. This swing towards more illiberal and internally focused politics threatens to make all these countries less attractive environments for business, and to slow growth, and carries domestic security ramifications. The most immediate risk to stability this poses is widening the gap between governments and their citizens who continue to support democracy. 

There is a high likelihood of disruptive and crippling demonstrations in Thailand in 2022, which would carry reasonable potential for a change in government. A digital crackdown and prosecutions have had little impact on a pro-democracy protest campaign that, unlike before, is composed of urbanised, middle-class young people. Facing a deadlock with activists, the King may have little choice but to depose the premier if large-scale protests resume and diminish his own role in the country’s political system. 

The reasons why so many governments in the region are veering away from democracy are varied. But it does seem to reflect a common inclination in a region of relatively nascent democracies to revert to simpler more inward-looking and autocratic ways to maintain a semblance of order and stability amid the crisis wrought by the pandemic. Yet such styles of governing are more likely to impede recovery and unravel the economic interdependence that has historically driven growth, rather than aid it.

Weighing even further against prospects for post-Covid-19 stability in Southeast Asia and a rebound to pre-pandemic growth levels are uneven and slow vaccine-rollouts that are unlikely to pick up pace well into 2022. Regional growth projections for Southeast Asia currently stand at around 5.0 percent after they were lowered by the Asian Development Bank from 5.1 percent in April. This downgrade was particularly pronounced in the case of Indonesia, Malaysia and Thailand. We forecast that the majority of regional countries are unlikely to fully vaccinate more than 60% of their respective populations before mid-2022, a shortfall that will probably drive growing disparity between and within countries. 

The risk of renewed outbreaks in 2022 will give governments further cause for tighter social and political controls. Any return to pre-pandemic levels of foreign entry and immigration will probably be delayed through the first half of the year, even for countries that are heavily dependent on tourism. 

Many governments in the Asia Pacific region successfully navigated the worst effects of the pandemic by implementing stringent containment and control measures. The broader political application of such measures risks becoming akin to an auto-immune response that does more harm than good. For some governments, Covid-19 provided an opportunity to revert to old ways of governing that champion stability and national independence. The paradox is that this will probably only render them more susceptible to the opposite. 

The Pentagon has said China could have 1,000 nuclear warheads by 2030, up from around 350 currently. 

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Images: Getty Images (Alex Wong; AFP)

In 2021, we tracked growing incidences of political arrests, pushes to implement and enforce laws that erode user privacy and enable greater censorship, and an overall rise in autocratic styles of governance in at least six or seven countries.

The Pentagon has said China could have 1,000 nuclear warheads by 2030, up from around 350 currently. 

+650
Authoritarianism and instability

At a broader regional level a key shift we anticipate shaping the Asia Pacific region in 2022 is growing authoritarianism in Southeast Asia. As the region attempts to pull away from the impacts of the Covid-19 pandemic, several governments have doubled down on controlling policies and curtailing democracy. In 2021, we tracked growing incidences of political arrests, pushes to implement and enforce laws that erode user privacy and enable greater censorship, and an overall rise in autocratic styles of governance in at least six or seven countries. 

This authoritarian shift has been notably observable in Thailand, Cambodia, China, Hong Kong, Laos, Myanmar and the Philippines. This swing towards more illiberal and internally focused politics threatens to make all these countries less attractive environments for business, and to slow growth, and carries domestic security ramifications. The most immediate risk to stability this poses is widening the gap between governments and their citizens who continue to support democracy. 

There is a high likelihood of disruptive and crippling demonstrations in Thailand in 2022, which would carry reasonable potential for a change in government. A digital crackdown and prosecutions have had little impact on a pro-democracy protest campaign that, unlike before, is composed of urbanised, middle-class young people. Facing a deadlock with activists, the King may have little choice but to depose the premier if large-scale protests resume and diminish his own role in the country’s political system. 

The reasons why so many governments in the region are veering away from democracy are varied. But it does seem to reflect a common inclination in a region of relatively nascent democracies to revert to simpler more inward-looking and autocratic ways to maintain a semblance of order and stability amid the crisis wrought by the pandemic. Yet such styles of governing are more likely to impede recovery and unravel the economic interdependence that has historically driven growth, rather than aid it.

Weighing even further against prospects for post-Covid-19 stability in Southeast Asia and a rebound to pre-pandemic growth levels are uneven and slow vaccine-rollouts that are unlikely to pick up pace well into 2022. Regional growth projections for Southeast Asia currently stand at around 5.0 percent after they were lowered by the Asian Development Bank from 5.1 percent in April. This downgrade was particularly pronounced in the case of Indonesia, Malaysia and Thailand. We forecast that the majority of regional countries are unlikely to fully vaccinate more than 60% of their respective populations before mid-2022, a shortfall that will probably drive growing disparity between and within countries. 

The risk of renewed outbreaks in 2022 will give governments further cause for tighter social and political controls. Any return to pre-pandemic levels of foreign entry and immigration will probably be delayed through the first half of the year, even for countries that are heavily dependent on tourism. 

Many governments in the Asia Pacific region successfully navigated the worst effects of the pandemic by implementing stringent containment and control measures. The broader political application of such measures risks becoming akin to an auto-immune response that does more harm than good. For some governments, Covid-19 provided an opportunity to revert to old ways of governing that champion stability and national independence. The paradox is that this will probably only render them more susceptible to the opposite. 

The North Korean headache

The potential of other crises emerging in the region is one important factor that could change Beijing’s calculus when it comes to its strategic goal of Taiwanese unification, and how it manages competition with the US. Due to its economic and military footprint, China is now the geopolitical centre of gravity in the region. And thus it is required to respond to any security developments that impact its regional assets and interests. 

One key source of strategic risk for China is North Korea, which also represents another crisis flashpoint to watch in 2022. Pyongyang is likely to continue to refuse to engage substantially with the US in 2022, despite probable overtures from South Korea to do so. In 2021, North Korea restarted cruise and ballistic missile testing and reactivated its primary nuclear reactor in Yongbyon. Further missile tests are likely, and nuclear tests are possible, in 2022. All of which would pose serious threats to the security of South Korea and Japan.

There are scant prospects for a denuclearisation of North Korea. And the US has few good options to deal with a new crisis on the Korean peninsula that seems all but inevitable at some point in the not too distant future. As North Korea sinks deeper into humanitarian and economic collapse, the regime’s nuclear capability affords it cover to stage provocations in a bid to ease sanctions and gain economic concessions. China is more able to exert pressure on North Korea by withholding energy supplies as it did in 2013 and 2014, but it is unlikely to step in and assist in a crisis given wider geopolitical agendas. 

Indeed, Beijing’s primary strategic objective almost certainly remains averting a collapse of the regime in Pyongyang and the attendant instability and refugee crisis on its border that would follow. Such a scenario is an outlier but with so little known about the situation in North Korea during the pandemic, or indeed of Kim Jong-Un’s health, it may be a far more near term risk than it seems. And one that Beijing can probably ill afford to let materialise.

The potential for instability in China

There are three key areas of uncertainty that may prove significant in how China acts in 2022. These reflect the country’s growing exposure to threats and risks as a result of regional and global overexpansion. They also reflect the rapid and sweeping changes in how China is governed under the leadership of President Xi Jinping. All have the potential to take the country off course should Mr Xi push too hard, too fast and too far.

The first is that it is unclear to what extent and for how long the Chinese government is able to fend off structural economic pressures and a potential slowdown. This is likely to be among the president's main priorities as major economic instability would challenge the Chinese Communist Party’s (CCP) legitimacy and probably translate into wider societal discontent. Some key threats would be sanctions and other measures targeting Chinese exports, and ongoing disruption to global supply chains. Such outcomes would almost certainly result should Beijing aggressively violate international law in the South and East China seas, and particularly if it were to attack Taiwan. 

The second uncertainty is the extent to which the centralisation of power under President Xi and his personality cult have created governance vulnerabilities and decision risks. Mr Xi exercises direct control over many aspects of bureaucracy and policy making. But it is unclear what impact this is having on the quality of governance and the extent to which policies are open to challenge. All this raises questions about the ability of the government to avoid major crises and manage them soundly when they occur. 

The third uncertainty is tied to the other two and points to the greater near-term risk. These are the uncertain consequences arising from Mr Xi’s signature ambitions to aggressively accelerate China to global high-tech superpower status by 2025. The riskiest aspect of that strategy is militarily forcing the resolution of its territorial claims in Asia, particularly over Taiwan.  

The economic fallout risks to China suggest that a military conflict over Taiwan is a very unlikely scenario in 2022. It probably serves Beijing well for the world to fear otherwise to achieve its goal without resorting to war. But taking control of the island is probably not an outcome Mr Xi can delay indefinitely given the political capital he has attached to it. And there is more than an outside chance that Beijing will take some type of overt action in 2022 to test US resolve and intimidate Taiwan. 

Such actions might include the seizure of outlying islands, missile tests or intensified military exercises and territorial incursions. But the most likely scenario in 2022 remains the ongoing use of covert ‘grey zone’ strategies and tactics – particularly cyber warfare, coercive diplomacy, paramilitary activity, propaganda and aggressive intelligence efforts – to discourage Taiwan and others from promoting or facilitating the island’s self-sufficiency. In grey zones or otherwise, this is still a strategy fraught with risk for China if events are misread, misjudged and mishandled.

A question of intent