Tensions between China and Taiwan escalated with increased military drills near the Taiwan Strait in early 2025. China reiterated its “One China” policy, while Taiwan strengthened defense partnerships with the US and Japan. The US sent naval forces to the region as a deterrent. ASEAN called for restraint, urging peaceful dialogue.

The conflict raised fears of global supply chain disruptions, particularly in semiconductors. Markets responded cautiously. Though no full-scale conflict erupted, the standoff remained one of Asia's biggest geopolitical flashpoints, demanding global attention.