Steering new dynamics in Asia-Pacific

Geopolitics plays a bigger role in regional dynamics

I will outline several key metrics that will affect and shape the geopolitics of this region to varying degrees. Globally, three important shifts are underway. The first is the logic of global economic pricing.

In the hyper-globalization era, markets were driven primarily by economic fundamentals, interest rates, inflation, employment, and fiscal and monetary policy.

Today, the world economy is entering an era of geopolitical pricing. Geopolitical risks — including war, sanctions exposure, supply chain security, sea lane communication, domestic political stability, control over strategic resources — have become essential pricing variables for major companies. These political fundamentals are increasingly important in determining the price of assets, the direction of trade, immigration of international talent, and investor confidence. Geopolitical factors are no longer a background condition but increasingly embedded in the evaluation itself.

The second shift involves the logic of military competition. From the Russia-Ukraine conflict to the US war against Iran, there has been a fundamental change in the organization of war. Warfare is entering the age of algorithms.

Unmanned systems are deployed on a large scale, artificial intelligence supports operational decisions, commercial supplies provide real-time battlefield awareness, and cyber operations are fused with kinetic force.

Military advantage is no longer defined simply by who possesses the most advanced weapons, but by who can integrate systems, process data, adapt quickly, scale affordably, and do so faster than the opponents.

The third shift concerns the logic of international order. The world once moved from Cold War bipolarity to unipolarity, and now multiple visions of order are competing simultaneously. One emphasizes the middle powers seeking great agency in shaping global governance, which I call the order of "Carneyism" after Canadian Prime Minister Mark Carney.

Another points toward the sphere of influence, structured by the major powers across both geopolitical and geo-technological domains. The third reflects a transactional logic, based on deals, reciprocity, and immediate national advantages, as very passionately advocated by United States President Donald Trump.

The fourth, which is strongly supported by Beijing, is a vision of a community with a shared future for humanity, emphasizing interconnected security and long-term cooperation.

The world is entering an era in which different orders overlap, compete and coexist. The system will be layered, contested and fluid. These ongoing shifts will define the geopolitical and geoeconomic landscape ahead.

In the future, we will navigate the unfamiliar waters of how states price risks, how they organize military power, and how they position themselves in this competitive order. That is the strategic environment we must prepare for.

Chen Dongxiao is president of the Shanghai Institutes for International Studies.

The views do not necessarily reflect those of China Daily.

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