Defence, not more assertive cyber activity, is the right response to Salt Typhoon

The ongoing Salt Typhoon cyberattack, affecting some of the United States’ largest telecoms companies, has galvanised a trend toward more assertive US engagement in the cyber domain.

This is the wrong lesson to take.

Instead, the US should prioritise investments in cyber defence and reconsider its commitment to persistent engagement, a strategic move away from earlier US approaches based on restraint and deterrence. The attack underscores the risks of an increasingly permissive cyber environment: one in which large-scale cyber operations are normalised, restraint is eroded and investments in cyber defence are insufficient.

In November 2024, reports began spreading that the Salt Typhoon group had penetrated several major US telecommunications networks. These operations compromised sensitive data, including call metadata of US citizens and communications vital to national security agencies. The US government says the Chinese government is behind the attack.

What makes it so concerning is that it exploited long-standing vulnerabilities in obsolete and unpatched network infrastructures. Telecommunications companies, including Verizon, AT&T and T-Mobile, failed to secure network devices, with some systems still operating without multi-factor authentication. Active for more than a year before its detection, the breach highlights the need for additional investments in cyber defence, while also demonstrating the potential consequences of underestimating evolving digital espionage.

While public analyses of the incident are correct in pointing out its significance, they risk missing broader context. The attack is part of a pattern of cyber operations between the US and China.

The US has adopted a cyber persistence strategy, increasing the scale and frequency of operations against adversaries. National Security Agency and Cyber Command activities have expanded, with the US aiming to demonstrate its ability to persistently counter Chinese cyber campaigns while continuing its own efforts to compromise similar systems in China and other countries. The theory underlying this approach is that over time, US adversaries will learn norms of appropriate behaviour in the cyber domain as a result of the US imposing costs through its extensive cyber capabilities. This approach, however, can have unintended risks.

Specifically, it may help to create a permissive environment, where large-scale cyber intrusions are not only expected, but accepted as part of international competition. As the US intensifies its cyber responses, the boundaries of acceptable state behaviour in cyberspace erode, making it harder to establish norms that could minimise future conflicts. China and other countries could view these persistent operations as a justification for their own cyber campaigns, entrenching norms that explicitly authorise large-scale cyber operations.

This does not mean that greater US restraint would fundamentally change China’s or other adversaries’ cyber behaviour, at least in the short term. It is unlikely that most active states in the cyber domain could be quickly induced to curtail operations.

Rather, the continued expansion of US offensive cyber operations, whether in response to the Salt Typhoon attack or more generally, will probably provide opposite lessons to what the proponents of the policy intend.

Cyber operations are unlikely to lead to military escalation. But it does not follow that increased offensive cyber operations will lead to the diffusion of norms of restraint. Rather than sparking tit-for-tat escalation dynamics, the danger is that adversaries and third-party states may conclude that these sorts of attacks are fair on the international stage. This would make the cyber domain a more dangerous place even without escalation to full military conflict. Even if this particular horse is already halfway out of the barn, states should resist the urge to chase it over the horizon.

As the cyber domain becomes increasingly permissive, states are continuing to underinvest in cyber defence. This leaves critical infrastructure vulnerable to prolonged breaches like Salt Typhoon and heightens the probability of those breaches occurring. Despite the US having one of the most advanced cybersecurity systems in the world, the attack remained undetected for more than a year. This prolonged response time underscores a failure: a reactive, rather than preventative, approach to cybersecurity.

The US and its allies should prioritise cyber defence. This would certainly involve technical research and development, which should be supported by increased public research spending. But it would also go beyond that. To respond to the Salt Typhoon attack, the US should develop legal and policy frameworks to channel public and private investment toward cyber defence.

Stricter regulations and cybersecurity standards for telecom providers are also essential, as voluntary measures are failing to counter persistent threats. Revisiting broad liability shields for software firms, at least in some critical infrastructure sectors, could help to ensure better overall levels of security by providing incentives to bring more secure software to market and maintain its security over time. Additionally, states should continue enhancing global cooperation on cyber threat intelligence-sharing and collective defence initiatives.

The Salt Typhoon attack reminds us of vulnerabilities inherent in global telecommunications and cybersecurity frameworks. As state-sponsored cyber activities increase, states should resist the urge to respond by normalising and legitimising large-scale cyber operations. They should instead prioritise defence mechanisms, resilience and the establishment of norms that discourage offensive operations.

Trump’s challenge to international order

US President Donald Trump has cast serious doubts on the future of the postwar international order. In recent speeches and UN votes, his administration has sided with Russia, an aggressor that launched a war of conquest against its peaceful neighbour, Ukraine. His tariff threats have raised questions about longstanding alliances and the future of the global trading system, and his withdrawal from the Paris climate agreement and the World Health Organization has undercut cooperation on transnational threats.

The prospect of a wholly disengaged, self-focused United States has troubling implications for world order. It is easy to imagine Russia taking advantage of the situation to try to dominate Europe through the exercise or threat of force. Europe will have to show greater unity and provide for its own defence, even if a US backstop will remain important. Likewise, it is easy to imagine China asserting itself more in Asia, where it openly seeks dominance over its neighbours. Those neighbours will surely have taken note.

In fact, all countries will be affected, because the relationships among states and other major transnational actors are interconnected. An international order rests on a stable distribution of power among states; norms that influence and legitimise conduct; and shared institutions. A given international order can evolve incrementally without leading to a clear paradigm shift. But if the preeminent power’s domestic politics change too radically, all bets are off.

Since relations among states naturally vary over time, order is a matter of degree. Before the modern state system, order was often imposed by force and conquest, taking the form of regional empires such as China and Rome (among many others). Variations in war and peace between powerful empires were more an issue of geography than of norms and institutions. Because they were contiguous, Rome and Parthia (the area around modern-day Iran) sometimes fought, whereas Rome, China and the Mesoamerican empires did not.

Empires themselves depended on both hard and soft power. China was held together by strong common norms, highly developed political institutions and mutual economic benefit. So was Rome, especially the Republic. Post-Roman Europe had institutions and norms in the form of the papacy and dynastic monarchies, which meant that territories often changed governance through marriage and family alliances, regardless of the subject people’s wishes. Wars were often motivated by dynastic considerations, though the sixteenth and seventeenth centuries brought wars born of religious fervour and geopolitical ambition, owing to the rise of Protestantism, divisions within the Roman Catholic Church and increased inter-state competition.

At the end of the 18th century, the French Revolution disrupted the monarchical norms and the traditional restraints that had long sustained the European balance of power. Although Napoleon’s pursuit of empire ultimately failed after his retreat from Moscow, his armies swept away many territorial boundaries and created new states, leading to the first deliberate efforts to create a modern state system, at the 1815 Congress of Vienna.

The post-Vienna Concert of Europe suffered a series of disruptions over the following decades, most notably in 1848, when nationalist revolutions swept the continent. Following these upheavals, Otto von Bismarck launched various wars to unite Germany, which assumed a powerful central position in the region, reflected in the 1878 Congress of Berlin. Through his alliance with Russia, Bismarck produced a stable order until the Kaiser fired him in 1890.

Then came World War I, which was followed by the Treaty of Versailles and the League of Nations, whose failure set the stage for World War II. The subsequent creation of the United Nations and the Bretton Woods institutions (the World Bank, the International Monetary Fund, and the precursor to the World Trade Organization) marked the most important institution-building episode of the twentieth century. Since the US was the dominant player, the post-1945 era became known as the ‘American century’. The end of the Cold War in 1991 then produced a unipolar distribution of power, allowing for the creation or strengthening of institutions such as the WTO, the International Criminal Court and the Paris climate agreement.

Even before Trump, some analysts believed that this US order was coming to an end. The 21st century had brought another shift in the distribution of power, usually described as the rise (or more accurately, the recovery) of Asia. While Asia had accounted for the largest share of the world economy in 1800, it fell behind after the Industrial Revolution in the West. And like other regions, it suffered from the new imperialism that Western military and communications technologies had made possible.

Now, Asia is returning to its status as the leading source of global economic output. But its recent gains have come more at the expense of Europe than the US. Rather than declining, the US still represents one-quarter of global GDP, as it did in the 1970s. While China has shrunk the US lead substantially, it has not surpassed the US economically, militarily, or in terms of its alliances.

If the international order is eroding, the US’s domestic politics are as much of a cause as China’s rise. The question is whether we are entering a totally new period of US decline, or whether the second Trump administration’s attacks on the American century’s institutions and alliances will prove to be another cyclical dip. We may not know until 2029.

When dealing with China, Australia must prioritise security over economics

China’s economic importance cannot be allowed to supersede all other Australian interests.

For the past couple of decades, trade has dominated Australia’s relations with China. This cannot continue. Australia needs to prioritise its security interests when dealing with Beijing, and it shouldn’t overestimate or overstate its vulnerability to China’s coercive trade practices.

Prioritising security is particularly important as we confront escalating global competition and China’s increasingly assertive behaviour. China’s live-fire exercises in the Tasman Sea have once again brought attention to the growing threat of aggressive Chinese military actions in the Indo-Pacific.

The exercises were conducted in international waters and violated no international law. But the behaviour broke norms and was less than ideal: usually, such exercises are preceded by adequate early warning to affected countries. In this case, neither Australia nor New Zealand was informed, and early reports suggest that passenger aircraft that were already enroute were forced to reroute because of the exercises. This is unacceptable international behaviour, and the Australian government should not be shy in saying so.

Australia has been more than accommodating of China. In response to press questions on live-fire exercises, Prime Minister Anthony Albanese said China ‘could have given notice but Australia has a presence from time to time in the South China Sea’. This framing was unwise, to say the least. Albanese no doubt wishes to avoid escalation, but it is unnecessary to provide such false equivalence, which Beijing could exploit. The comment offers China a free pass.

Economic issues are important for political leaders, especially in democracies, where everyday issues take precedence even over discussions about national security. This is probably why Albanese highlighted the government’s success in boosting trade and addressing disputes with Beijing—even though many of these disputes were of China’s doing, rather than Australia’s.

But Australian leaders should also recognise that China is not simply doing us a favour by trading with us. It benefits from the goods and services that Australia offers and the revenue from what it sells. This is a mutually beneficial relationship, and disruptions will affect China too.

While China may be able to source its mineral and other resources from other parts of the world, Australia can similarly find other markets for its resources, as it has in response to previous Chinese trade obstruction. China buys from Australia for a variety of reasons, including price, quality and the predictability of supply. These are not values it can get from anywhere. In many countries, resources are in conflict zones that are difficult to access.

Any trade disruption would likely hurt Australia more than it would hurt China, but it would still damage China’s economy. There is a reason why previous trade punishments have targeted a few niche products, such as wine. China has not targeted critical items, such as mineral resources, precisely because it knows that its own economy would face difficulties if it did so. As China’s economy slows, the cost of transitioning away from Australian goods and services rises.

China has repeatedly used trade sanctions against smaller economies—such as Norway, Canada, Sweden and Mongolia—for perceived slights and other political reasons. But it has never really benefited from doing so, instead gaining a reputation as a bad and unreliable actor. Its trade threats in the past few years have been more bark than bite, with most targeted countries, including Australia, standing their ground and China eventually backing off.

While Australia should not pursue trade confrontation, it may be similarly unwise to emphasise or exaggerate its vulnerability, as this will only invite pressure. Rather, Australia should initiate talks with its European and Indo-Pacific partners, as well as the US, to present a united front against such threats.

China can make threats and apply sanctions only against countries with smaller economies, and only because it thinks they will have to face such sanctions alone. Even if sanctions are ineffective—as indeed they have been—we cannot let China assume that it can get away with such behaviour without consequences. A united response to China’s trade bullying is needed to deter and, if deterrence fails, punish China for such aggressive actions.

Political leaders in democracies no doubt have a hard time balancing economic and security requirements in foreign policy. But they should avoid over-emphasising trade and economic factors—Beijing will assume these are pressure points when leaders talk as if they are. Australia must instead emphasise that it will not bend to such tactics.

Overseas investment is getting riskier. The government needs to step up

Australian companies operating overseas are navigating an increasingly volatile geopolitical landscape where economic coercion, regulatory uncertainty and security risks are becoming the norm. Our growing global investment footprint is nationally important, and the Australian government must support it more strongly.

The government needs to do this above all to counter market manipulation by China and even its seizure of Australian assets, but other risks are piling up, too.

Australia’s outward foreign investment is not just about business; it is a strategic imperative, with the country’s superannuation funds, trade stability and national security all tied to the success and resilience of its companies operating in high-risk environments around the world.

Many Australians understand the importance of inward foreign investment in driving economic growth, but far fewer appreciate the scale of Australian capital flowing overseas. Australia’s total investment abroad now stands at $3.8 trillion—82 percent as large as the stock of foreign direct investment in Australia.

Manufacturers, financial institutions and miners lead our outward foreign direct investment (FDI), the establishing or buying of businesses in other countries. It embodies Australia’s deep economic integration with global markets. Yet, as geopolitical risks intensify, Australia can no longer take the security of these investments for granted, especially in the mining sector.

Australian minerals companies have built a huge global footprint. S&P Global data shows that Australian-headquartered and ASX-listed companies operate 331 mines and downstream processing plants domestically and that 120 Australian companies manage 212 mining and processing facilities overseas.

In 2024 alone, Australian companies invested $4.6 billion in exploration, of which 53 percent spent in Australia and the rest on all other continents except Antarctica. The $195 billion in outbound mining FDI recorded in 2023 further illustrates the scale of this global presence, alongside $215 billion in manufacturing FDI, much of which is tied to minerals processing.

Australian miners have a long history of navigating complex global environments. However, rising geopolitical tensions, economic coercion and regulatory instability make risk management increasingly difficult. The sector’s dependence on foreign capital and markets leaves it vulnerable to supply chain disruptions, trade restrictions and political interference, which threaten profitability and long-term strategic resilience.

Front of mind here is China’s increasing economic coercion. China’s actions serve to reshape global minerals markets, creating risks that extend far beyond trade disruptions. Through market manipulation, aggressive acquisition tactics, and political interference, China is systematically undermining competition. It is attempting to seize control of critical minerals projects and even emboldening hostile regimes to detain Australian mining executives as leverage for financial gain.

Chinese-linked companies have used coercive tactics and state-backed influence to try to take control of Australian-owned mining operations, particularly in some African countries with weak governance in minerals. In 2024, an Australian company was awarded US$90 million in compensation after the Tanzanian government unlawfully seized a nickel deposit, highlighting the unstable regulatory environment Australian firms can face abroad.

Meanwhile, Russian-backed military regimes in Mali and Niger, combined with jihadist insurgencies in key West African mining regions, are increasing security risks for Australian businesses. The closure of US military bases in Niger in 2024 further complicated the security landscape, raising concerns about the long-term viability of Australian investment in these regions.

While the Australian government sponsors the West Africa Mining Security Conference, tangible support for Australian companies operating in high-risk regions is minimal. Unlike Canada, which maintains 17 trade offices across Africa, Australia has just one, in Nairobi. Despite Australia’s large mining and petroleum investments in West Africa, there is just one diplomatic post to service nine countries. This lack of diplomatic and commercial representation leaves Australian companies at a significant disadvantage in security and investment advocacy.

Meanwhile, escalating tariff disputes between the United States and China and retaliatory trade measures from Canada, Mexico and the European Union further complicate Australian companies’ investment and trade outlook. The full impact on Australian-controlled production at home and abroad remains uncertain but potentially severe.

Australian mining depends heavily on foreign investment and financial mechanisms, including cash-backed offtake agreements. China dominates the financing and sales mix, making it an essential partner and a strategic risk. China’s deliberate manipulation of mineral prices, particularly in rare earth markets, and its covert and coercive attempts to acquire key mining assets directly threaten Australia’s economic sovereignty.

Multiple takeover attempts of Northern Minerals and allegations of similar activities around control of Global Lithium Resources demonstrate China’s ongoing efforts to increase control over Australia’s critical minerals industry. This threatens national security and broader supply chain diversification efforts.

The Australian government must take decisive action in response to the rapid escalation of geopolitical risks.

First, a dedicated task force led by the Department of Foreign Affairs and Trade should provide real-time risk assessments and direct assistance to companies navigating complex security and regulatory environments. Second, the Australian Securities and Investments Commission must collaborate more closely with the Foreign Investment Review Board to detect and counter corporate coercion threatening Australia’s national interest. Third, Australia must prioritise deeper engagement with like-minded partners, including the US, Canada, Japan, the EU and South Korea, to accelerate the development of more secure, diverse and sustainable critical minerals supply chains.

While Australia has made cooperation commitments under multiple critical minerals agreements, implementation has been slow and inadequate. With global competition intensifying, there is no time to waste.

In case we forgot, Typhoon attacks remind us of China’s cyber capability—and intent

Australians need to understand the cyber threat from China.

US President Donald Trump described the launch of Chinese artificial intelligence chatbot, DeepSeek, as a wake-up call for the US tech industry. The Australian government moved quickly to ban DeepSeek from government devices.

This came just weeks after the Biden administration stunningly admitted on its way out of office that Chinese Communist Party hackers were targeting not just political and military systems but also civilian networks such as water and health. The hackers could shut down US ports, power grids and other critical infrastructure.

These incidents remind us that China has the intent, and increasingly the capability, to seriously challenge US and Western technology advantage. Australia will be an obvious target if regional tensions continue to rise. It must be well-prepared.

As ASPI’s Critical Technology Tracker highlights, China’s advances in critical technologies have been foreseeable for some time. US and Western confidence is manifesting as complacency.

DeepSeek has emerged as a cheap, open-source AI rival to the seemingly indomitable US models. It could enable Chinese technology to become enmeshed in global systems, perhaps even in critical infrastructure.

Meanwhile, Chinese hackers have stealthily embedded themselves in US critical infrastructure, potentially enabling sabotage, or the coercive threat of sabotage, to extract something Beijing wants. The two main perpetrators of these operations are Salt Typhoon and Volt Typhoon. The Chinese government backs both.

Salt Typhoon’s infiltration of at least nine US telecom networks has enabled CCP-sponsored hackers to geolocate individuals and record phone calls, directly threatening personal privacy and national security. This devastating counterintelligence failure includes the identification of individuals that US agencies suspect are agents working for China. It also enables CCP surveillance and coercion of US nationals and Chinese dissidents.

If anything, Volt Typhoon poses a greater threat, with covert access to critical infrastructure networks. Each reinforces the dangers of the other.

Some US officials involved in the investigation have said the hack is so severe, and the networks so compromised, that the United States may never be sure the intruders have been fully rooted out.

Both operations demonstrate sophisticated stealth. In particular, Volt Typhoon’s technique of living off the land—in which they sit at length in the systems, using its own resources—made detection harder. It could gain outwardly legitimate access without the requirement for malware. This reveals an intent to map and maintain access to critical systems, not for immediate destruction, but for whenever best serves Beijing’s interests. In this sense, it can be seen as a precursor to war.

The focus on critical infrastructure underscores how malicious cyber operations can undermine national resilience during peacetime and crises and sow doubt on a government’s ability to safeguard the people. Through these operations, adversaries could influence a target country’s decisions as leaders avoid taking any action that might provoke a disruption or sabotage.

Australia’s intelligence agencies are aware of these risks. Australia’s director-general of security, Mike Burgess, warned in his 2024 annual threat assessment that ‘the most immediate, low cost and potentially high-impact vector for sabotage [by foreign adversaries] is cyber’. This was reinforced in his 2025 assessment when he declared that ‘foreign regimes are expected to become more determined to, and more capable of, pre-positioning cyber access vectors they can exploit in the future.’ He warned that we’re getting closer to the threshold for ‘high-impact sabotage’.

The Australian Signals Directorate has been improving preparedness and resilience. It has helped Australian organisations to defend themselves and mitigate prepositioning and living-off-the-land techniques. ASD has also been building offensive capabilities needed to impose costs on attackers.

We must avoid the traps China sets as it seeks global information dominance. First, we can’t be complacent. It’s unsafe to assume that the US and its allies will remain decisively better than China, and that we can counter whatever Beijing can do. Second, we must reject the viewpoint that ‘everyone spies so it would be hypocritical to condemn China’, as it is a false moral equivalence. Third, we must avoid arguing that there isn’t present threat just because Beijing doesn’t have the intent to go to war today. This wishful thinking is a dangerous mistake. If we fall into these traps, we present Beijing with more time and render ourselves incapable of advancing our interests.

Chinese capabilities are strong and growing, and the way they are being used by the CCP demonstrates clear malign intent. This should be pushing elected governments to take the protective action and prepare for future cyber operations.

The reluctance to see the threats in the information domain as equal to traditional threats is a decades-old mistake that must be corrected. We need to minimise our dependence on China for technology.

China’s naval deployment should invigorate Australia’s election debate

The Australian government’s underreaction to China’s ongoing naval circumnavigation of Australia is a bigger problem than any perceived overreaction in public commentary. Some politicisation of the issue before a general election is natural in a democracy—and welcome if it means Canberra’s defence and China policy settings feature more prominently in debates ahead of the election due by May.

How times have changed. Fifteen years ago, Australia was worried that the quadrilateral partnership with India, Japan and the US would spook China, making it worry that it was being strategically encircled by the US and its regional allies and partners. Wind the clock forward to 2025 and China’s navy is off Perth, circumnavigating Australia with a potent surface action group.

This is the furthest south that a Chinese naval flotilla has ventured. This one is composed of a cruiser, a frigate and a replenishment ship—above the surface, at least.

Naval analysts have urged Australia to temper its reaction to the deployment because Canberra has a reciprocal interest in freedom of navigation in China’s maritime periphery. This is certainly a factor, and to some extent puts the government in a bind. The Chinese navy has a clear legal right to operate in waters close to Australia, even if it is going very far out of its way to make a point. That includes the right to conduct live-fire exercises.

But what point is Beijing making? Even while noting legal reciprocity in freedom of navigation, ordinary Australians are quite entitled to read hostility in China’s intentions. The flotilla was not invited here, and China didn’t notify us it was coming. Carrying out live fire exercises in the Tasman Sea with little or no notice, as the flotilla did on 21 February, wasn’t just unprofessional; it sent an unmistakably coercive signal to Australia and New Zealand.

By sending its navy all the way around Australia, the Chinese Communist Party is signalling that all of Australia lies within reach and is part of its area of direct military interest. It is showing it can project combat power and potentially hold Australia’s maritime communications at risk even though it lacks a base close to the continent. (And we should not think that Beijing has given up on getting one.)

The initial response from Australia’s government was muted and, on the issue of whether China had given warning of its live fire drills, muddled. This, and Prime Minister Anthony Albanese’s evident desire to downplay the significance of the deployment will have been noted by Beijing, which with the deployment is testing and comparing reactions in Canberra, Wellington and Washington.

The United States, under new political management, has so far stayed silent on the deployment, despite the concurrent presence in Australia of the chief of its Indo-Pacific Command and a US nuclear submarine at HMAS Stirling, near Perth. There is still time for the US to show its support this week, before the task group completes its tour of Australia and returns to the South China Sea through the Indonesian archipelago, as it can be expected to do.

New Zealand’s initial response was conspicuously better than Australia’s. Defence Minister Judith Collins linked China’s motivations to its strategic quest for greater influence and access to marine resources in the South Pacific, uncomfortably underscored by a recent deal between Beijing and the Cook Islands that blindsided Wellington.

A firmer Australian government reaction could have set the tone for a less divisive political debate. Canberra’s contention that it has stabilised bilateral relations with China looks increasingly questionable in light of the unsubtle ‘or else’ message trailing in the Chinese navy’s wake as it sails around Australia. China’s coercion of Canberra since 2020 has never stopped; it has simply taken different forms.

Australians and New Zealanders should not fall into the trap of viewing China’s naval deployment to their neighbourhood in isolation and adopting a defensive mindset. In fact, the Chinese military is mounting concurrent drills at several locations, including near Japan, Taiwan and the Gulf of Tonkin, close to Vietnam. Beijing is ramping up its military presence across the Western Pacific to calibrate regional reactions, most likely with an interest in probing the strength of US alliances and security partnerships early on in the second Trump administration.

The more Australia and other countries speak with one voice on China, the harder it will be for Beijing to exploit potential wedges.

This will not be the last time a Chinese surface action group undertakes a three-ocean deployment around Australia. But the current deployment may turn political debate to defence spending increases, the hollowed-out state of the Royal Australian Navy’s surface capabilities and the government’s supposed stabilisation policy settings. If it does, we may owe a debt of gratitude to the Chinese navy.

Southeast Asia faces AI influence on elections

Artificial intelligence is becoming commonplace in electoral campaigns and politics across Southeast Asia, but the region is struggling to regulate it.

Indonesia’s 2024 general election exposed actual harms of AI-driven politics and overhyped concerns that distracted from its real dangers. As the Philippines and Singapore head to the polls in 2025, they can draw lessons from Indonesia’s experience, while tailoring insights for their electoral landscapes.

While deepfakes dominated concerns in last year’s elections, a quieter threat loomed: unregulated AI-driven microtargeting. These covert and custom messages are delivered at scale via private channels or dark posts—targeted advertisements that don’t appear on the publisher’s page, making them difficult to track. This isolates recipients, making verification trickier. The risk is even greater in Southeast Asia, where fake news thrives amid low media literacy rates.

AI in Indonesia’s general election was more commonly used for image polishing and rebranding than attacking opponents, though some attacks occurred. Prabowo Subianto, a retired military general known for his fiery nationalism, rebranded himself as a cuddly grandfather to soften his strongman image. This redirected the focus from substantial issues, such as corruption and economic challenges, to superficial narratives, including his cheerful dances.

Darker deepfakes also emerged, such as an audio clip of then presidential candidate Anies Baswedan being scolded by the chair of the National Democrat Party, Surya Paloh. A video of late President Suharto endorsing the Golkar party also went viral. This was controversial given Suharto’s dictatorship and violent record.

Microtargeting in Indonesia also notably focused on young voters instead of racial segments. Prabowo’s rebranding resonated with youth—usually first time voters who lacked political maturity. This demographic emerged as an important voter segment, comprising about 60 percent of the total electorate in Indonesia’s 2024 general election.

The situation emphasises a need for intentional regulations. Currently, the Indonesian Electronic Information and Transactions and Personal Data Protection laws address electronic content, including deepfakes, but lack election-specific AI guidelines. The General Election Committee could have helped, but it earlier declared AI regulation beyond its jurisdiction. Instead, Indonesia’s Constitutional Court now prohibits AI for political campaigning.

Indonesia’s experience offers valuable lessons for its close neighbours. In May 2025, the Philippines will hold mid-term elections, and Singapore will have a general election this year too. Both nations are enforcing some rules but their approaches differ to Indonesia’s.

Given the Philippines’ complex experience enforcing technology-related bans (some effective, others not so much), simply prohibiting AI during elections may not be ideal. Instead, the Commission on Elections is taking the transparency route, requiring candidates to register their digital campaign platforms—including social media accounts, websites and blogs—or face penalties. While the use of deepfakes is prohibited, AI is permitted with disclosure.

Singapore has previously implemented measures that ensure comprehensive coverage. For instance, its Elections Bill complements its legislation on falsehoods by barring AI-generated deepfakes targeting candidates. However, the proposed legislation applies only during the official election period and excludes private conversations, potentially leaving gaps for disinformation outside election season, microtargeting through private messaging and deepfakes of influential non-candidates. Such vulnerabilities have already been observed in Indonesia.

These cases also highlight Southeast Asia’s uneven regulatory readiness. Tackling AI risks demands a stronger stance, more binding than a guide or roadmap, bolstered by a whole of society collaboration to address complex challenges.

An article in Time argued the effect of AI on elections in 2024 was underwhelming, pointing to the quality—or lack thereof—of viral deepfakes. But Indonesia’s case suggests that power may lie not just in persuasiveness but also in appeal. Prabowo’s camp successfully used AI-generated figures to polish his image and distract people from real problems.

To dismiss the effect of AI is to miss the normalisation of unregulated AI-powered microtargeting. Last year revealed AI’s capability to target vulnerable yet sizable populations such as the youth in Indonesia, potentially beyond election cycles.

Blanket bans are an easy cop-out and may just encourage covert uses of AI. With choices available, people can simply use other companies. When OpenAI banned its use for political campaigning and generating images of real people, Prabowo turned to Midjourney, an AI image generator.

An alternative solution is to ensure transparent and responsible AI use in elections. This requires engaging those with contextual knowledge of the electorate—academics, industry leaders, the media, watchdogs and even voters themselves—alongside policymakers such as electoral commissions and national AI oversight bodies. But a key challenge remains: some Southeast Asian countries still lack dedicated AI regulatory bodies, or even AI strategies.

In the development of such bodies and strategies, public participation in AI policy consultations could ensure electorate concerns are heard. For instance, Malaysia’s National AI Office recently opened a call for experts and community representatives to help shape the country’s AI landscape. International organisations may also contribute through capacity building and stakeholder engagement, fostering relevant AI policies and regulations.

Certainly, further studies are needed for tailored AI governance for specific societies. But overall, adaptive and anticipatory regulation that evolves as technology advances will help mitigate AI-related risks in Southeast Asian elections and beyond.

China is on course for a prolonged recession

The risk of China spiralling into an unprecedentedly prolonged recession is increasing.

Its economy is experiencing deflation, with the price level falling for a second consecutive year in 2024, according to recent data from the National Bureau of Statistics of China. It’s on track for the longest period of economy-wide price declines since the 1960s.

Coupled with the collapse of the property sector, a looming trade war with the United States and demographic and debt overhang challenges, much of the Chinese public has lost confidence in the economy and its leadership.

The country has the ingredients for a recession, and not a short one. It has spent too much on investment and needs to turn to consumption as a source of demand, but people are unwilling to spend. They have long had high savings rates, and now deflation is further discouraging spending. So do falling property values, ageing of the population and excessive corporate and government debt.

Getting out of such a recession will be hard, because of the challenge of restoring confidence and getting households and businesses to spend more. Since local government debt is high, expanding public expenditure to stoke demand would worsen economic imbalances.

Current deflation is a result of the Chinese government’s long-standing adherence to the China model, which consists of extensive state control and ownership of resources, limited free-market activity, and authoritarian CCP leadership. The model fuelled both the country’s economic miracle and its most intractable problem: a structural imbalance between investment and domestic consumption.

To sustain fast growth and cushion economic downturns, China has long relied mainly on investment in infrastructure, property and manufacturing. Household consumption is seriously constrained through unfair policies and a discriminatory social security system. These include strictly limited rights to move for work, weak human rights protections and relatively low benefits for migrant workers.

In the 30 years to 2012, investment gradually rose from 32 percent to 46 percent of GDP, while the share of final consumption declined from 66.6 percent to 51.1 percent. The high rate of investment financed necessary infrastructure upgrades and modernised China’s production technology, helping the country become a global manufacturing powerhouse. However, over time, high rates of investment led to severe overcapacity in key industrial sectors, particularly after the 2008 financial crisis.

Under Xi Jinping’s leadership since 2012, the government has persisted with an export-oriented policy. In 2023, investment accounted for 41.1 percent of nominal GDP (versus a global average of 24 percent), with consumption representing 56 percent (versus a global average of 76 percent). China’s trade surplus in 2024 reached a record US$992 billion. This may displease Donald Trump who may choose to implement trade barriers that could further destabilise the Chinese economy.

Xi has failed to progressively institute a welfare state to create the confidence needed for boosting household consumption. He believes welfarism encourages laziness. So, amid ongoing economic and political uncertainty, families have long prioritised cutting expenses and increasing savings, which has further depressed domestic consumption.

In the second quarter of 2024, the central bank’s income confidence index registered 45.6 percent, down 4.4 percentage points from the first quarter of 2022, when the government imposed strict controls against Covid-19. China’s household savings rate surged to 55 percent in 2024, up 11.2 percentage points from 2023 and the highest level since 1952.

Xi has made it clear that he intends to stay the course, and is doubling down on state economic control. China has shifted away from market liberalisation, reverting to state-led development and industrial policy. The private sector has lost out. The share of private enterprises among China’s largest listed companies declined sharply over three years, from 55 percent in mid-2021 to 33 percent in mid-2024. China’s foreign direct investment dropped 27.1 percent in 2024, following an 8.0 percent decline in 2023.

The rapid ageing of China’s population will make it difficult to boost domestic consumption and rein in ballooning debt over the next decade.  The pension system is at risk of running dry by 2035, further exacerbating structural imbalances that policymakers have vowed to address.

With never-ending anti-corruption and ‘strictly governing the Party’ campaigns, Xi has taken China back to a personal dictatorship after decades of institutionalised collective leadership. Under the centralised one-man rule, any efforts by local governments and officials to break the rigid political system risk severe punishment.

More and more laws and regulations have been enacted to surveil the population, driving up social costs. Reformers and advocates of greater freedom of thought and expression have been silenced under Xi’s crackdown on human rights. The political reforms in the Deng Xiaoping, Jiang Zemin and Hu Jintao eras, which unleashed economic dynamism and spurred innovation, have come to a halt or even regressed.

The government’s stimulus measures have failed to boost economic recovery. Since July 2024, the youth unemployment rate has remained above 17 percent.

The economy might not yet be in recession—meaning contraction in GDP—but it is now growing very slowly by its standards of the past four decades. The government estimates GDP was 5.0 percent higher last year than in 2023, but researchers at Rhodium Group estimate growth was in fact only 2.4 to 2.8 percent.

For a faster solution to nearby maritime threats, look to the Australian Army

China’s not-so-subtle attempt at gunboat diplomacy over the past two weeks has encountered various levels of indignation in Australia and throughout the region. Many have pointed out that the passage of a three-ship naval task group about 500 kilometres off Australia’s east coast took place in international waters, a comment echoed in China, where officials have accused Australian politicians of ‘deliberately hyping’ the issue.

Many commentators have seized this opportunity to highlight the failure of Australia’s naval shipbuilding program over generations to meet the necessary ship production numbers for national security. They also point out that the current surface-ship building program will not take effect until the 2030s.

This misses a deeper point, however: what if the Chinese navy did sortie into our waters, or worse still, decided to interfere with our air and maritime movements by declaring, for instance, an air defence identification zone, similar to what occurs in the waters off Taiwan every time the Taiwanese disturb the Chinese Communist Party? Could we take any action?

The answer to this question goes to the core of Australian defence policy in 2025.

Military strategy is often described as ‘ends, ways, and means’, which serves as a useful model for understanding the application of strategy. In this context, the ends represent the ambitions of the 2024 National Defence Strategy, which aims to deter any hostile acts against Australian territory, its people and international interests. Deterrence is achieved through effective diplomacy, a strong economy and, in this case, military hard power.

With deterrence established in policy as an end, the ways logically follow. Referring to our observations from the past two weeks, ways would manifest as an operational concept or plan to deny the Chinese open access to our home waters. This might involve an Australian-flagged maritime task group that could be rapidly deployed and capable of shadowing and deterring the Chinese. Typically, this task group would consist of frigates, submarines and supply ships. Other methods would include air power, such as maritime surveillance and strike aircraft from the Royal Australian Air Force.

With ends and ways established, the final element of applying military strategy is the means, which essentially represent the forces and platforms necessary to carry out military operations. Here, the Australian Defence Force may face some challenges in the period leading up to 2030, as much of the capability being acquired by the government through its National Defence Strategy is not scheduled to become operational before the end of the decade. While the National Defence Strategy outlines ends, ways and means for the early 2030s, there is some risk in generating the tools for military strategy in the interim.

This brings us back to the dilemma posed by the Chinese naval group off Australia over the past two weeks. Despite the fleet of ships remaining in international waters and the comments from many that this activity raises no concerns for our future defence capability plans, it nonetheless does reflect on our current military capacity and highlights the urgent need for ongoing improvements in force projection, sea control and, where necessary, maritime strike.

More ships, submarines and long-range missiles will be essential for future solutions beyond 2030. But what about the present? One potential solution is to use the Australian Army, whose advancements in developing a future force focused on Australia’s maritime and littoral approaches are often overlooked in political discussions regarding the nation’s defence forces.

In the realm of land-based maritime strike, the government could accept some capability risk to expedite the acquisition of land-based anti-ship missiles. These systems can deter any foreign navy or future hostile power from entering home waters. The army could deter a blue-water navy in local waters, much as the Ukrainian Army has driven off the Russian Black Sea Fleet. While the Pacific Ocean is vast and land-based strike has its limitations, this strategy offers an immediate capability for defending home waters and addressing recent events, in contrast to ships and missiles not scheduled to arrive until 2030.

With the rapid acquisition of an army system to complement developments in the navy and the air force, Australia could calibrate its ends, ways and means both now and beyond 2030 as major projects are delivered.

The presence last week of a Chinese naval task group off our east coast in international waters demonstrates the sudden and dramatic pressure the Chinese navy can exert on our neighbourhood. Australia must implement an effective military strategy now; it cannot wait until 2030.

To avoid a Ukraine-style quid pro quo, Australia needs to work with the US on critical minerals

With Donald Trump back in the White House, Washington is operating under a hard-nosed, transactional framework in which immediate returns rather than shared values measure alliances. For Australia, this signals a need to rethink its approach to the US relationship.

A key step would be to work with the United States in the extraction and processing of Australian critical minerals. By partnering with the US in this area, and freeing both countries from reliance on China, Australia can solidify its alliance position. It can raise itself further above the level of Ukraine, whose vast reserves of critical minerals (including rare earth elements) have become a mere bargaining chip in negotiations with Washington.

Trump’s objective with Ukraine—a minerals-for-security quid pro quo—is emblematic of the new US foreign policy doctrine, in which assistance is granted not on principle but in return for something tangible. Since Australia is a top-four global producer of rare-earth elements, with reserves critical to US defence and technology industries, a question arises: could Trump demand a similar deal from Australia?

Australia should not wait for the request to come but rather put forward a strategy, or series of proposals with the US and other partners such as Japan, that are in the interests of itself and global security.

Unlike Ukraine, which seeks military aid to fight an immediate existential threat, Australia has an alliance with the US that is still based on the shared strategic interest of regional stability and deterrence of aggression. Articles III and IV of the ANZUS Treaty oblige the parties to ‘act’ in response to threats against the other, but interpretation of that has always been uncertain.

Under Trump’s America First doctrine, coming to Australia’s aid could be accompanied by a compensating demand for greater access to Australia’s rare earth elements, lithium, cobalt and titanium.

Unlike Ukraine, however, Australia is not merely a resource supplier. As a regional power with strategic assets of immense military value to the US, it has a far stronger bargaining position.

Trump’s approach to alliances is brutally simple: nations must prove their worth in tangible, immediate terms. This is where Australia has an advantage. Beyond critical minerals, it provides the US with something far more valuable: strategic positioning and intelligence infrastructure. Robertson Barracks in Darwin hosts rotational US Marine deployments, bolstering US force posture in the Indo-Pacific without the cost or political sensitivity of permanent basing. Joint Defence Facility Pine Gap is essential to US intelligence, surveillance, and reconnaissance, providing real-time missile warning and electronic signals intelligence that the US cannot easily replicate elsewhere. Harold E Holt Naval Communications Station is one of the US’s primary links to its submarines, securing its undersea deterrence in the Indo-Pacific. Northwest Cape and Cocos Islands radar installations are vital to US Space Command, tracking adversary satellites and space debris amid China’s expanding orbital footprint.

If Trump sees Ukraine’s rare earths as leverage, Australia must ensure that its strategic assets are recognised as even more valuable. The risk lies in failing to assert this before any transactional demands are made.

Australia cannot afford to passively assume alliance obligations will hold under a leader who views diplomacy as a business process. Instead, Canberra must shape the terms of engagement, reinforcing why its role in the Indo-Pacific delivers more long-term value to the US than simple access to its minerals. This requires a more assertive, transactional approach that speaks Trump’s language of hard bargains while safeguarding Australia’s sovereignty.

Australia should pursue a strategic critical minerals agreement with the US that reduces both nations’ dependence on China’s dominance of rare earth supply chains and processing. A deal that prioritises joint investment in refining and manufacturing capacity, rather than just raw material supply, will strengthen sovereign capabilities, enhance supply chain resilience, and ensure long-term security for both economies.

This type of practical initiative would complement Canberra’s framing of the alliance as one of true partners, with emphasis on joint military infrastructure, intelligence cooperation and Indo-Pacific stability as assets of equal value worthy of security guarantees. Strengthening leverage before negotiations are forced to start by some third-party action is essential to ensuring the US recognises that Australia’s strategic geography, intelligence facilities and force integration are irreplaceable advantages.

Expanding resource partnerships with like-minded nations such as Japan and EU members will reduce dependency on any single power’s economic coercion tactics. Pre-emptively signalling non-negotiable red lines will reinforce that while Australia is willing to cooperate, access to sovereign resources cannot be dictated under duress.

For the US, Ukraine’s rare earths are a short-term geopolitical play. In contrast, Australia’s strategic positioning and alliance role are long-term necessities. As the Indo-Pacific becomes the central theatre for global competition, the US needs Pine Gap, RAAF Tindal, HMAS Stirling and Robertson Barracks. The difference between Ukraine and Australia lies not just in geography but in bargaining power. In Trump’s transactional world, Australia must ensure it negotiates from a position of strength, not subservience.