Global Risk Analysis
2022

PHP Global Risk Analysis Project
PHP Research Institute(Summary)© 2022 PHP Institute, Inc. All rights reserved.
Neither this summary nor excerpts thereof may be reprinted, copied, or retranslated
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PHP Global Risk Analysis Project, PHP Research Institute

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English Summary of the“2022 PHP Global Risk Analysis” Report

Introduction
This English-language summary presents the essence of the “2022 PHP Global Risk
Analysis” report, published in Japanese at the end of 2021 by PHP Sōken (PHP ResearchInstitute), the policy think tank of the PHP Institute, Inc.
The annual “PHP Global Risk Analysis” reports are the output of focused analyses by abroad-ranging team of experts in geopolitics, regional studies, international finance,
global economics, space-system engineering, and cyber security issues. The 2022 editionis the eleventh report in the series; the full report, published in Japanese, may be
downloaded from the following URL:
https://thinktank.php.co.jp/policy/7210/
The full Japanese-language report includes a “Global Overview” describing theworldwide context for the various risks we face, followed by detailed analyses of 10
global risks to which Japan will need to pay particular attention in 2022. The report
explores the likely impacts of each of these risks on the nation, as well as the policy
implications for Japan. This English-language version is a complete translation of the“Global Overview” and the key analysis points for each of the 10 risks.
The world’s strategic landscape is undergoing steady change, presenting new forms to
us as it does so. The United States and China, two great powers, remain arrayed against
one another as rivals, but neither seeks military confrontation; rather, they strive
against each other, testing their relative strengths and seeking the appropriate distanceto maintain. Flows of people, goods, money, and information across borders are being
rearranged for reasons rooted in national security, environmental, and human rights
issues; in realms like cyber security, space development, and green technology, theinternational mood is undoubtedly more competitive than cooperative today. The
contradictions laid bare in our systems by economic disparities and environmental
crises, along with the havoc wreaked by technological upheaval, are prompting a broadreevaluation of centuries-old trends in human life on earth, from capitalism to industrial
civilization and urbanization. Many of the developments we witness in 2022 will likely
be triggered by these major shifts from the current mode of civilization to the next.
The 10 risks in this report are not presented in order of importance. Rather, they havebeen arranged so as to highlight the connections among them and to make it easier forreaders to grasp the overarching structure of the global risks we face.
It is our hope that this eleventh “PHP Global Risk Analysis” report will provide readerswith insight they can use to grasp the opportunities that arise amid the dynamic shifts
brought about by the political, economic, and technological changes we face today.
January 2022
PHP Global Risk Analysis Project, PHP Research InstituteGlobal Overview
Bipolarization Advances in Amorphous Forms●●

The United States and China seek advantage in their rivalry as they grapple with one
another.
➢ The Sino-American standoff becomes settled as a facet of the “new normal” inthe post-COVID-19 landscape.
➢ While maintaining unyielding stances on subjects like Taiwan and human rights,
Washington and Beijing have a continuing common interest in the need to avoid
military clashes. The sides achieve temporary respites from their rivalry as theybuild distance between themselves in fields like digital platforms and sensitivetechnology.
➢ If the unfolding series of minor crises escalates, bringing the two sides to thebrink of conflict, it will produce a clearly antagonistic dynamic along classicalCold War lines.
Domestic political developments unfold worldwide in the shadow of the ongoingpandemic.
➢ At the Communist Party of China’s 2022 party congress, Xi Jinping is expected toclaim an unprecedented third term at the nation’s helm, making “Xi’s China” afact of life for the global community for the foreseeable future. Pressured bylatent opposition within the CPC, Xi will need to pursue smooth international
relations for the sake of domestic stability; at the same time, though, he will find
it difficult to strike a compromising stance with respect to China’s foreigncounterparts.
➢ In the United States, the administration of President Joe Biden will stress its
achievements in the leadup to the midterm elections in November. Avoiding
policy missteps will be of paramount importance to the White House during thisperiod.
➢ Following the end of Angela Merkel’s long-lasting chancellorship in 2021,
Germany has seen the launch of a “traffic-light coalition” comprising threeparties with often differing policy goals. France, meanwhile, will hold apresidential election in 2022. The unifying force of France and Germany at thecenter of the European Union will prove shaky as the two countries see theirleadership limited during these transitions.
➢ The United States will watch as four of its allies in the East Asian region—Japan,

South Korea, Australia, and the Philippines—hold elections in 2022. Thailand,●●too, must hold a general election no later than March 2023. Other key events on
the global calendar include elections to determine leadership in Brazil andNorthern Ireland, as well as the Beijing Olympic and Paralympic Games.
Higher-level linkages form among states.
➢ New groupings continue to take shape in response to changes in the security
environment, as seen in AUKUS (Australia, Britain, and the United States) andthe Quad (the Quadrilateral Security Dialogue, including Australia, India, Japan,
and the United States), as well as enhanced ties among Russia, China, and othernations in the region surrounding Afghanistan. As the EU’s Strategy for
Cooperation in the Indo-Pacific shows, existing frameworks are also beingpressed to adapt to new conditions.
➢ China will move through RCEP, the Regional Comprehensive Economic
Partnership Agreement that enters into force in January 2022, and other means
to enhance its economic ties with other states. The nation’s application formembership in the Trans-Pacific Partnership represents an attempt to defang
attempts to contain China and to increase its own influence within theinternational community.
Regional conflicts head toward greater direction by local actors.
➢ Two decades on from the September 11, 2011, terrorist attacks, the UnitedStates is becoming more cautious when it comes to wielding military force when
the benefits to the nation are less clear. In the Middle East and other places
where American pressure is lessening, regional states and other local actors areorienting themselves for conflict or the creation of new orders.
➢ In regions seeing growing power vacuums, IS-K, or Islamic State Khorasan, andother terror groups are becoming more active on the ground. Inexpensive but
highly capable drones will increasingly see use in terrorist attacks.

Capitalism and Hyper-Mutual Dependence Enter a Period of
Adjustment●

Governments move to extricate themselves from the “wartime footing” from which
they have fought the pandemic.
➢ The money supply expands dramatically due to loose monetary policies
implemented worldwide in the face of COVID-19’s impact. Historically highlevels of public debt accumulate as interest rates remain low. As government

functions continue to balloon, corporations and individuals grow increasingly●●

reliant on the public sector, leading to fears of lasting stagnation.
➢ Even as hopes rise that vaccines and other measures will provide a way out ofthe pandemic, uncertainties remain, including questions about how longantibodies remain effective and the emergence of new viral variants.
Considerable gaps arise in the speed at which various national economies
rebound from COVID-19’s blow, with some countries experiencing social unrest
as a result.
Capitalism is buffeted by criticisms from all quarters.
➢ Against a backdrop of advancing globalization and automation and the declineof unionized labor, capital increasingly holds the upper hand over workers, andlabor’s share of economic output continues to fall. In developed economies,socioeconomic disparities widen as the middle class dwindles and employment
becomes increasingly precarious for many.
➢ Fundamentalist critiques of capitalism as the source of these disparities, as well
as of environmental crises, spark increasingly vigorous debate on the need toreconstruct an appropriate form of capitalism. Stronger tax-collection regimes
and antitrust measures are increasingly a drag on the activities of multinational
corporations and major digital platform operators; moves will also pick up paceto roll back the developments that brought these giant actors to prominence.
The shift from hyper globalization to economic security gains force.
➢ Momentum weakens in moves toward further trade and investment
liberalization. The environment, human rights, labor issues, data protection, andother factors join national security as causes for more stringent standards
brought to bear in order to effect change in supply chains and investment
trends.
➢ Amid the pandemic and the ongoing Sino-American rivalry, concern continues
to rise about excessive reliance on particular nations or companies for vital
goods. Economic security policies become the norm as countries increasingly
seek to diversify the sources of the goods they need and to revitalize domestic
industry.
➢ Even between China and the United States, though, trade and investment flows
remain vigorous. Various decoupling and recoupling efforts take place on a
global scale as nations keep their eye on implications for security and the impact
on their domestic societies.
➢ Flows of people are an increasingly central political issue with respect tomigrant laborers, refugees from civil conflicts and worsening environmental
conditions, and immigration controls aimed at preventing the spread ofinfectious disease. Alarm grows at moves by some states to send flows ofrefugees across borders on purpose.

Confusion at a Time of Civilizational Shifts●

The “green revolution,” positioned as a shift to a new civilizational phase, continues
its meandering course.
➢ The “green shift” moves to extricate economies from reliance on fossil fuels andfrom mass production, consumption, and waste are the antithesis to industrial
civilization. The world sees complicated interplay between opposing trends
toward global industrialization and postindustrialization.
➢ Moves accelerate toward reducing industry’s and society’s reliance on fossil
fuels, but the energy and electricity shortages seen in 2021 bring latent risks to
the forefront during this transitional period. Hydrogen and other resources seen
as future energy sources also join in this increasingly confused free-for-all.
➢ Fierce competition arises to determine who will set the green agenda that
determines the competitive standing of nations and corporations. The rules of
the game in the automotive sector are changing dramatically, as seen in the riseof electric vehicles and mobility as a service; this will be a decisive point for theJapanese economy as it teeters between vigor and decline. Moves continue to●●achieve an agreed-upon set of environmental accounting standards.
➢ Nations increasingly account for the impact of climate change on their militaryand security situations as they craft their strategies. The United States and otherleading countries make greater efforts to assess flooding and other risks thatface their military installations.
The “digital civilization” takes increasingly clear form.
➢ The Artificial intelligence, 5G communications networks, and quantum
computing combine to take our digital society to a new level. Moves to mint
purely digital currencies and expand online environments like the “Metaverse”
have growing real-world impact.
➢ “Globotics,” as put forward by Richard Baldwin, plays a growing role in industry;
one outcome will be the exposure of white-collar workers to waves of cutthroat
competition.
Cyber, outer space, the human cognitive domain, and other fields become newcompetitive realms.
➢ As the wholesale digitization of societies continues apace, cyber security
remains a key issue. Vulnerabilities in the physical infrastructure underpinningcyberspace, such as undersea communications cables and satellite networks,
become a focus of fresh attention.
➢ Controlling outer space is recognized as essential for controlling the cyberrealm. Constellations of satellites are put into orbit and the space businessexpands rapidly alongside fierce competition among nations to exploit outerspace.
➢ Individuals continue to wield more influence through social media; at the sametime, though, social environments continue to prove weak against information
pollution. Influence operations, such as through the dissemination of fake news,
become a standard part of the strategic arsenal. The human cognitive domain
becomes a new field for strategic maneuvering.
●●Society sees increasing decentralization, accompanied by resistance to this trend.
➢ The weaknesses of highly urbanized societies are being laid bare by the
pandemic. The risk of severe natural disasters is also growing more dire. The
rapid acceptance of remote work is contributing to moves away from urban
concentration and toward more societal scattering.
➢ The merits of urbanization, namely the integration and efficiencies it makes
possible, remain compelling. More scattered societies also discover new
demerits, including the environmental burden of reliance on broader
distribution networks and a lack of drivers to keep them running, as well as thefragility of information infrastructure connecting widely dispersed homes.
Societies increasingly walk a tightrope between further scattering andreconcentration in populated centers.
Liberalism finds itself running aground.
➢ As societies make their way through this period of major change, they see therapid rise of movements demanding climate justice and other forms of social
justice, leading also to fierce backlashes.
➢ Liberalist thought that seeks to achieve a blend of the freedom of the individualand compromise achieved through debate and appropriate procedures finds
itself increasingly buffeted by attacks from both the right and the left.

Global Risks 2022
1. A “Chinese Nightmare” Triggered by Xi Jinping’s Increasingly Autocratic Rule
● Xi given access to unfettered power by the “historical resolution” granting him athird term as China’s leader● An increasingly hardline Chinese stance threatens to trigger fresh military tensions
2. Northeast Asia Destabilized by US-China Strategic Moratorium● The asymmetric gap between the United States, with its nuclear capabilities, andChina, with its missile capabilities produces a superficial “strategic stability” along●●with the divergent aims of these parties in the same arena
Nuclear crisis reignited on the Korean Peninsula
Decoupling of alliances and an arms race in the Northeast Asian region

3. Arrival of an Age of Space Geopolitics Brings Dramatic Shifts to the Space
Development Environment● The rise of China as a space power accompanies a clear trend toward multipolarity
in the satellite launch field● The outer-space game changes as constellations of satellites are designed andlaunched at full scale●International maneuvering heats up as states strive to define global standards forthe space field

4. Global Rifts Grow Starker with the Green Shift● Divergent positions become clear on climate change and decarbonization● Resource prices to remain high over the longer term as power shifts in the markets● Inconsistencies arise between views of nations and the financial sector on theenvironmental field
5. Global Market Confusion Triggered by Difficulty of “Soft Landing” for the US
and Chinese Economies●●●

The US Federal Reserve’s stimulus tapering reverses actions by investors andcorporations used to flows of ultra-easy money
Doubt cast on the capabilities of the Chinese authorities in charge of macroeconomic
controls
US, Chinese trade and economic policies increasingly hampered by domestic
situations

6. Biden’s Moderate Course Threatened by “Divided States of America”●●●

A “cold civil war” throws up roadblocks for the White House“Managed competition” between China and the United States: easier said than done
US allies find themselves entangled in the country’s economic security measures

7. EU Political Situation Made Fluid by Shifting Franco-German Axis
● European unity could be threatened by Macron loss to far-right forces in French
presidential election● Germany’s “traffic-light coalition” likely to see cracks emerge due to challenges infunding policies● EU energy policies divided on choice between climate neutrality or economic growth
8. Weaponized Migrants and Refugees Wielded as Threat by Dictatorships● Controlled flows of migrants and refugees emerge as a new political tool
● Impoverished people abandoned by states taken in by terror, criminal organizations
looking to increase their power
9. Cyber Warfare an Increasingly Common Way for States to Implement Their Will
● Government authority undermined by increasingly vigorous information operations● Rampant cyber operations exploit vulnerabilities● Invasive cyber attacks mounted against AI systems
10. Russia Increasingly Assertive Amid Growing Geopolitical Uncertainty● Vladimir Putin weighs United States, China against one another as Sino-American
rivalry heats up● US-Russian confrontation grows harsher over “red lines” in Ukraine, Black Sea
region● Decarbonization efforts provide a tailwind to Russian ambitions

Project Members
Taisuke Abiru
Senior Research Fellow
The Sasakawa Peace Foundation

Toshio Nawa
Executive Director/Senior Security
AnalystCyber Defense Institute, Inc.

Masafumi Iida
Head
America, Europe, and Russia Division,
National Institute for Defense Studies

Noriaki Oba
President/Energy Analyst
G.K. Post-Oil Strategy Institute

Satoshi Ikeuchi
Professor
Research Center for Advanced Scienceand Technology, The University of Tokyo

Seiko Shirasaka
Professor
Graduate School of System Design andManagement, Keio University

Masafumi Kaneko
Director, Member of the Board/Chief
Research Officer
PHP Institute, Inc.

Izuru Sugawara
Analyst of International Politics
CEO, Global Risk Advisory LLC

Haruyoshi Mabuchi, CFA
President
Bouquet de Fleurettes
Seiya Nakajima
Visiting Professor
Fukui Prefectural University

Koichi Tajima
Division Manager
Research Division, Japan Credit Rating
Agency Ltd.
Toshiyuki Yasui, PhD, PMP
Dean of Department of Social System
Design and Professor
Eikei University of Hiroshima