Indo-Pacific Monitor No. 46

CHINA EXPANDS MARITIME ACTIVITY...
Japan is raising the alarm over China recently dispatching two aircraft carriers into the Pacific's "second island chain." China has steadily expanded its maritime activity in the East Pacific in recent years, even as its territorial designs over Taiwan have become more aggressive. However, the incident marks the first time that Chinese aircraft carriers have operated jointly, or ventured near the U.S. territory of Guam.

The PRC is ramping up its regional maritime presence in other ways as well. Earlier this month, China conducted a combat readiness patrol around the disputed Scarborough Shoal, in the South China Sea. Such patrols have been taking place since June, with Beijing asserting that it will "resolutely defend national sovereignty and security." (Reuters, July 3, 2025; Associated Press, June 12, 2025)

...AS NERVOUS NEIGHBORS SEEK STRENGTH IN NUMBERS
The growing Chinese activity is causing regional states to increasingly mobilize – and collaborate – in response. Japan, for instance, has agreed to export destroyers to the Philippines, a move that rubs up against the country's "self defense" constitution. Technically, Tokyo cannot legally export warships to third nations. However, its security legislation stipulates that it may transfer and modify defense equipment for the sake of joint development projects with other states. Against the backdrop of mounting Chinese maritime activity, Tokyo is increasingly exploiting these legislative gray areas to build up its warfighting capabilities and those of its regional partners in order to counteract Chinese military expansion across the island chains. (Japan News, July 5, 2025)

NATO SUMMIT HIGHLIGHTS TAIWAN RISK
At the recent NATO summit in The Hague, Secretary General Mark Rutte issued a direct warning about the possibility of a coordinated global crisis — suggesting that if China were to strike Taiwan, Russia could move in parallel to distract Western forces in Ukraine or elsewhere. In an interview with the New York Times on the sidelines of the summit, Rutte laid out that such a multi-front scenario is the most likely way that the PRC would approach the conquest of Taiwan. "There's an increasing realization, and let's not be naïve about this: If Xi Jinping would attack Taiwan, he would first make sure that he makes a call to his very junior partner in all of this, Vladimir Vladimirovich Putin, residing in Moscow, and telling him, 'Hey, I’m going to do this, and I need you to keep them busy in Europe by attacking Nato territory,'" Rutte said. In response, he stressed the importance for Alliance members "working together with the Indo-Pacific" and collaborating "on defense industry, innovation" with countries in the region. (The Independent, July 8, 2025)

THE QUAD GOES ROCK SOLID
Representatives from The Quad (Australia, India, Japan, and the United States) met this month at the State Department, announcing a new development in their partnership aimed at mineral trade. Led by Secretary of State Marco Rubio, the four nations declared a "Quad Critical Minerals Initiative" that would seek "to strengthen economic security and collective resilience by collaborating on securing and diversifying critical mineral supply chains." This development is intended to counter China's current dominance of mineral supply chains in the South China Sea. (Associated Press, July 1, 2025)

BITCOIN BOOMS IN BHUTAN
The nation of Bhutan has been making significant leaps in the integration of Bitcoin into its economy, and now boasts the world's 3rd largest Bitcoin cache — valuated at roughly $1.3 billion, approximately 40% of the country's GDP. Since 2020, Bhutan has proven itself to be an ideal candidate for Bitcoin mining conditions — cool climate, remoteness, and a surplus of cheap electricity. In turn, Bitcoin mining has led to a drop in reliance on hydroelectric exports, as well as pay raises for the Bhutanese civil service. Bhutan has even begun partnering with other countries like Singapore in crypto-commerce, in the process establishing itself as a serious contender in the international crypto economy. These developments don't come without concern, however. Some Bhutanese officials worry that overreliance on cryptocurrency could lead to economic instability, especially for a country that still lacks the overall financial stability of its peers. (Wall Street Journal, July 2, 2025)

NORTH KOREA FOCUSES ON CYBERCRIME
With its economy long stunted by, and suffering from, international sanctions, North Korea has increasingly turned to digital crime for much needed revenue. The core of the DPRK's cybercrime strategy is the use of false identities, enabled by infiltrating remote workers' networks and exfiltrating personal information, which is then used to steal from hundreds of employers. Furthermore, North Korea has not been acting alone. Reports from the DOJ and FBI indicate that North Korean operatives received assistance from citizens in China, Taiwan, and the United States in their illicit activities. (New York Times, July 2, 2025)