Indo-Pacific 5x5: July 11th 2025
China & the Malacca Strait - India, Argentina, and Brazil - Philippines-Canada defence agreement inked - China's housing crisis - a new Japan-Canada intelligence sharing pact
The Malacca Dilemma: China's Achilles' Heel
"China is the world’s largest energy consumer, accounting for 25% of global energy consumption and 15% of all oil used globally. Its total primary energy demand surged from 1,800 Mtoe in 2000 to over 4,500 Mtoe [Million tons of oil equivalent] in 2020. Since 2000, China’s oil consumption has quadrupled—from 3.5 million barrels per day (mb/d) to over 15 mb/d in 2025. In parallel, China has become the world’s second-largest consumer of LNG (maritime-supplied gas), accounting for 16% of global LNG demand."
"Nearly all maritime energy imports pass through a single strategic chokepoint: the Strait of Malacca. All of China’s energy sea lines of communication (SLOCs) converge through this strait. Each year, $3.5 trillion worth of trade—equivalent to one-third of global GDP—passes through the Strait of Malacca, including two-thirds of China’s total trade volume, over 83% of its oil imports, and approximately 16 mb/d of oil and 3.2 mb/d of LNG. Roughly 6.4 billion deadweight tons (dwt) of cargo pass through the strait annually, with about 10 vessels entering or exiting every hour. Most of these shipments consist of fossil fuels from the Middle East and Africa."
"Although China currently receives about 3.7 mb/d of oil through overland pipelines and plans to expand capacity to 9 mb/d, this still falls far short of covering the nearly 15 mb/d it consumes. In the short term, China’s dependence on the Strait of Malacca—and on maritime oil imports more broadly—is set to deepen."
https://moderndiplomacy.eu/2025/07/08/the-malacca-dilemma-chinas-achilles-heel/
India, Brazil, Argentina chart new economic vision for South-South collaboration
"India-Argentina bilateral cooperation has seen remarkable growth in recent years. Trade between the two nations peaked at USD 6.4 billion in 2022, with India emerging as Argentina’s fourth-largest trading partner. In 2024, annual bilateral trade rose by 33% to USD 5.23 billion, further solidifying India’s position as a key export destination for Argentina."
"Brazil remains India’s largest trading partner in South America, with bilateral trade reaching USD 12.2 billion in 2024–25. Indian investments in Brazil exceed USD 6 billion, spanning sectors like pharma, automobiles, and energy. Brazilian investments in India, meanwhile, focus on mining, steel, and bio-energy."
"Brazil’s Embraer has established a subsidiary in New Delhi, signalling the seriousness of bilateral partnerships in aerospace and defence. Indian defence exports, such as indigenous solutions for AWACS systems and transport aircraft, offer both strategic autonomy and opportunities to foster innovation ecosystems in both regions. Argentina, too, presents avenues for defence technology partnerships in areas like surveillance, maritime logistics, and shared security. These collaborations not only strengthen bilateral ties but also enhance regional stability in the Southern Hemisphere."
Philippines to sign troops pact with Canada as defence ties deepen
"The agreement would establish a framework for increased military and defence cooperation and collaboration between the two nations and improve interoperability between their forces, the Philippines' defence ministry said in a statement."
"In 2023, the Philippines and Canada signed an arrangement for the use of Ottawa's Dark Vessel Detection system to combat illegal, unreported and unregulated fishing by vessels that have switched off their location transmitters to evade detection."
"Last year, the Philippines ratified a reciprocal access agreement with Japan, the first of its kind that Tokyo has signed in Asia, that would allow their militaries to deploy on each other's soil."
China's Housing Crisis Is Worse Than It Seems
"But the number of Chinese urban dwellers aged 28-32 peaked in 2019 – and the real-estate bubble burst shortly thereafter. Now, the real-estate sector – which, at its 2020-21 peak, contributed 25% of total GDP and 38% of government revenue – is blighted by weak demand, falling construction, and severe overcapacity. Declining prices have decimated household wealth, with losses equivalent to China’s annual economic output. This has undermined consumption, employment, borrowing, and investment."
"The crisis that is brewing in China is more severe than the one Japan faced. For starters, China’s housing bubble is much larger. For example, residential investment, as a share of GDP, was about 1.5 times higher in China in 2020 than in Japan in 1990. Property accounted for about 70% of Chinese households’ total assets in 2020, compared to around 50% in Japan in 1990. China’s price-to-income ratio today is more than twice that of Japan in 1990."
"Moreover, China’s fertility rate is lower. Whereas Japan experienced a second surge of first-time homebuyers a decade after the first, China can look forward to no such thing. The share of the population over the age of 65 is increasing much faster in China than it did in Japan: it took Japan 28 years to get where China will get between now and 2040. During that period (1997-2025), Japanese GDP growth averaged just 0.6% annually."
Japan, Canada sign intel-sharing pact to boost defense cooperation
"In a joint press announcement after their talks in Tokyo, Foreign Minister Takeshi Iwaya and his Canadian counterpart Anita Anand also welcomed the start of mass imports of Canadian liquefied natural gas by the Japanese private sector earlier this month."
"With growing security challenges including China and North Korea in mind, Japan has already signed similar intelligence-sharing agreements with the United States, Britain and Australia -- all members of the Five Eyes alliance alongside Canada and New Zealand."
https://mainichi.jp/english/articles/20250709/p2g/00m/0in/018000c
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Disclaimer: Headlines, and content selections, presented here are taken directly from the referenced articles and online platforms, and do not reflect any personal value judgment, statement or opinion. I make no warranty as to the accuracy, completeness, or truthfulness of the content of these articles. All news and information presented should be carefully scrutinized, considering the credibility of each source, the documented or discernible facts, the statements presented, and the strength of supporting evidence. Readers should form their own conclusions through the application of informed critical analysis. In detail >