• Asia’s maritime chokepoints – the Malacca, Taiwan and Luzon Straits – are vulnerable to geopolitical disruption as China-US rivalry and regional tensions intensify.
• Blockades or restrictions could disrupt global trade and supply chains, including energy and semiconductors.
• Although the world’s major powers have incentives to preserve free navigation, rising geopolitical uncertainty means the risks are becoming more significant.

Rising tensions

A more volatile and uncertain global geopolitical order, including growing China-US rivalry and the possibility of regional conflict, could threaten trade through Asia’s key maritime chokepoints: the Malacca Strait, Taiwan Strait and Luzon Strait.

The closure of the Strait of Hormuz highlights the risks and consequences of disruption with Asia hit hard, given the region’s heavy reliance on Gulf energy supplies. 

Disruption to Asia’s own shipping chokepoints could likewise have a material impact on a region that handles the largest volume of global trade.

• Malacca Strait: Situated in the territorial waters of Malaysia, Singapore and Indonesia, the Malacca Strait is an international narrow strait linking Asia to Africa, the Middle East and Europe, where freedom of navigation is granted to all ships. It handles the largest volume of goods trade globally, accounting for 38% by volume in 2023.
• Taiwan Strait: Separating Taiwan and mainland China, the Taiwan Strait is the world’s second busiest sea trade passage, with half of the global container fleet passing through. Its importance also extends to the semiconductor industry, with disruption potentially threatening trade in advanced chips.
• Luzon Strait: Situated between Taiwan and the Philippines, the Luzon Strait ranks third in importance behind the Malacca and Taiwan Straits. 

Geopolitical risks 

The biggest risk stems from rising China-US rivalry.

China is becoming increasingly assertive in the islands and waters of the South China Sea, while the US seeks to preserve freedom of navigation. Beijing claims sovereignty over around 90% of the South China Sea, in defiance of the ruling of the UNCLOS arbitral tribunal. This has contributed to recurring maritime tensions, particularly with the Philippines and Vietnam.

China’s intensifying military pressure around Taiwan could also lead to a conflict and disrupt trade through the Taiwan Strait, which Beijing regards as being under its sovereignty, while threatening global supplies of semiconductors.

However, important mitigating factors remain. Above all, China has little interest in disrupting global trade and regional supply chains, on which its own economy continues to depend.

Looking ahead

Going forward, however, a more uncertain geopolitical order is likely to place Asia’s maritime chokepoints under greater scrutiny, while increasing the risks of disruption and changes to established rules. 

Rising conflict risks and strategic competition across the Indo-Pacific region will also create greater vulnerabilities for Asian economies, notably Taiwan, the Philippines, Japan and China, as well as for the global economy.

For more information, please contact your Credendo contact person.