State-Based Armed Conflict Tops Global Risks in 2025
The World Economic Forum's (WEF) Global Risks Report 2025, released on January 15, 2025, identifies state-based armed conflict as the most pressing immediate global risk, with nearly 25% of respondents ranking it as their top concern. This assessment reflects escalating geopolitical tensions worldwide, including heightened U.S.-China relations, intensified India-Pakistan conflicts, and renewed Cambodia-Thailand border disputes.
The WEF's report underscores a world grappling with increasing geopolitical instability. Recent events, such as U.S. Defense Secretary Pete Hegseth's remarks labeling China as an imminent threat, the Pahalgam terrorist attack intensifying India-Pakistan tensions, and the Cambodia-Thailand border skirmish, exemplify the rising state-based armed conflicts. These developments not only threaten regional stability but also have significant implications for global trade, economic growth, and international cooperation.
U.S.-China Relations
On June 1, 2025, U.S. Defense Secretary Pete Hegseth described China as a "real and imminent threat" in the Asia-Pacific region during the Shangri-La Dialogue in Singapore. He accused China of seeking regional dominance and preparing for potential military conflict. In response, China's Ministry of Foreign Affairs urged the U.S. to "stop inciting conflict" and interfering in regional peace and stability, labeling Taiwan as an internal matter and rejecting U.S. assertions.
Subsequently, on June 5, 2025, U.S. President Donald Trump and Chinese President Xi Jinping held a 90-minute phone call, marking their first direct conversation in months. They agreed to resume high-level economic talks, addressing issues including the export of rare earth minerals critical to the U.S. automotive sector. President Trump announced that President Xi agreed to resume the flow of rare earth minerals and magnets to the United States, a development likely to ease trade tensions. Chinese Vice Premier He Lifeng is scheduled to visit the United Kingdom from June 8 to June 13, 2025, to participate in the first meeting of the China-U.S. economic and trade consultation mechanism.
India-Pakistan Conflict
On April 24, 2025, a terrorist attack occurred in Pahalgam, India. India accused Pakistan of sponsoring militants, leading to diplomatic expulsions, suspension of visa services, and military skirmishes between April 24 and May 6, 2025. The historical context of India-Pakistan relations, particularly concerning the Kashmir region, adds complexity to the situation.
Cambodia-Thailand Border Tensions
On May 28, 2025, Cambodian and Thai soldiers exchanged fire over a disputed border area, resulting in casualties and prompting both nations to seek international mediation. The two nations have longstanding disputes over border demarcations, leading to occasional military confrontations.
Implications of Rising Geopolitical Tensions
The escalation of geopolitical tensions has significant implications for global trade and the economy. Supply chain disruptions, such as those between the U.S. and China, can affect industries reliant on rare earth minerals and other critical resources. Uncertainty stemming from conflicts and trade disputes can lead to market volatility, impacting global economic growth. For instance, global markets have shown increased anxiety as geopolitical tensions escalate, with military spending on the rise and financial markets reacting to the instability.
Societal impacts include the spread of misinformation and disinformation, which can erode public trust in institutions, exacerbate societal polarization, and hinder effective governance. Armed conflicts and border tensions can lead to loss of life, displacement of populations, and humanitarian crises.
The WEF's Global Risks Report 2025 serves as a critical reminder of the complex and interconnected challenges facing the global community. Recent geopolitical developments, particularly in U.S.-China relations, India-Pakistan tensions, and Cambodia-Thailand border disputes, underscore the urgency of addressing these risks through international cooperation, strategic communication, and proactive policy measures.