12 Jun 2019

Leading Sydney-based think-tank, the Lowy Institute recently released the 2019 edition of the Asia Power Index, an interactive digital tool ranking 25 countries in terms of power they wield in the Asia-Pacific region. The report was recently launched together with a panel session at the Lee Kuan Yew School of Public Policy.

The index assessed 25 countries and territories in terms of “what they have, and what they do with what they have” — reaching as far west as Pakistan, as far north as Russia, and as far into the Pacific as Australia, New Zealand and the US. It examines power across eight indicators: military capability, defence networks, economic resources, economic relationships, diplomatic influence, cultural influence, resilience and future resources.

Global-is-Asian distills the key findings from the launch:

Asia power index overview

Source: Lowy Institute Asia Power Index 2019

US supremacy in Asia declines as China closes in

While the United States remains the dominant superpower in Asia, it is fast losing ground to China, as the impact from the escalating trade tensions takes a toll on Washington’s economic and diplomatic clout in the region.

The rise of protectionism and the current “America First” foreign policy under president Donald Trump “may be accelerating this trend,” warned Hervé Lemahieu, lead author of the latest edition of the Asia Power Index, during the launch. “The Trump administration’s focus on trade wars and balancing trade flows one country at a time has done little to improve the glaring weakness of US influence, its economic relationships.”

Since last July, President Trump has slapped tariffs on Chinese imports to reduce Washington’s trade deficit with Beijing. Recently, the US hiked a 10% tax on US$200 billion worth of Chinese goods to 25% and has also threatened to impose tariffs on other trading partners such as the European Union and Japan.

Describing the US as being in "relative decline", Lemahieu, who is also the Director of the Asian Power and Diplomacy Program at the Lowy Institute, added that “short of war, the US is unlikely to halt the narrowing power differential between itself and China”.

The US once again took the top spot with a score of 84.5 out of 100, but it was China that saw the most improvement, jumping to 75.9 this year. The US had a 10-point lead over China in 2018, but that gap has narrowed to 8.6 points in 2019.

Analysing the findings during a panel discussion, Lemahieu said Washington’s latest move towards a more inward-looking “revisionist economic agenda” was in sharp contrast to the country's traditional role of providing consensus-based leadership. He added this has adversely impacted the US’s diplomatic sway in the region, “indicating it has become less effective at converting its resources into broad-based influence in Asia”.

Professor Khong Yuen Foong, Vice Dean (Research) at the Lee Kuan Yew School of Public Policy and Li Ka Shing Professor in Political Science, agreed with the broader implications of the findings that power in the region is concentrated between the US and China jostling for supremacy in Asia.

“The index shows clearly that Asia is bipolar. This will be a struggle for the number one position in the region. The US wants to maintain its hegemony and China wants to displace it in due course.”

The strained US-China relations would inevitably stoke geopolitical tensions in the region, but “whether it leads to a military clash is harder to say,” he added. “It depends on how fearful the US is of China’s rise, how patient or impatient China might be and the alignment of choices of the countries in the region.”

China’s internal challenges

Even as China has made significant strides in the index as an emerging superpower, the report warned that the country faces political and structural challenges to establishing primacy in the region.

President Xi Jinping’s flagship Belt and Road Initiative faces growing degrees of opposition in the region. In many cases China has been forced to renegotiate infrastructure projects in Malaysia and Myanmar due to concerns over feasibility and cost.

Internally, China also faces an estimated decline of 158 million people in its current workforce in less than 30 years, leading to societal and economic challenges, the study added.

Professor Kanti Bajpai, Director at the Centre on Asia and Globalisation at the Lee Kuan Yew School of Public Policy, argued that it may be difficult for China to decouple its economy from the US completely.

“If China wants to get out from the middle income trap and rise to the next level, it will have to deal with the technology issues,” he added in reference to the recent move by the US to ban China’s telecom giant Huawei Technologies from buying parts and components from US companies on national security grounds.

“The trade war isn’t just a trade war but essentially a technology war. So we really have to see how much the American technology denial will harm the Chinese economy or not in the long-term.”

Japan and India share major power status

Beyond the US-China power dynamics, the report revealed that Japan and India - ranked third and fourth respectively, also wield significant power in the region but in very different ways.

Japan has become “the quintessential smart power” and the new “leader of the liberal order in Asia,” according to the report. “Setting regional standards and maintaining an inclusive multilateral architecture has become a key organising principle under the premiership of Shinzo Abe,” it said. A case in point is Tokyo’s successful resuscitation last year of the Trans-Pacific Partnership trade pact as the TPP-11, after president Trump pulled the US out of the deal in 2017.

Japan has also proven a capable rival to China for infrastructure investment in South and Southeast Asia. It has used its economic diplomacy to offer Washington alternatives to China's Belt and Road initiative.

As for India, the report highlighted the country is set to become the fastest-growing economy in the region. “India’s economy is predicted to double in size and reach approximate parity with the US by 2030,” it said.

However, the economic giant suffers from a poor track record of converting its sizeable resources base into strategic gain in Asia—despite Prime Minister Narendra Modi’s Act East Policy. It trails behind in the influence measures, most notably in defence networks and economic relationships.

“India will not be the next China. New Delhi lacks the control over the allocation of economic resources, which has been intrinsic to China’s rise. Yet as the giant grows in uneven and incremental steps, so too will its ambitions,” noted the report.

Significant developments in North Korea and Southeast Asia

Like China, another country that saw significant improvement in the index is North Korea. Pyongyang’s high-stakes power game seems to have paid off for the regime. Not only did the country jump five spots in diplomatic influence, but managed to overtake the Philippines - registering the largest increase in its overall power score after China.

North Korea’s summit diplomacy in Singapore and Vietnam — ostensibly on equal terms with the US — “has elevated and partly normalised North Korea’s regional standing and ties,” said Lemahieu. “However, Pyongyang remains a brittle power preoccupied by its survival. The risk of a lapse into further crises is high.”

Meanwhile, countries in Southeast Asia have continued to make inroads. Singapore, despite its relative small size, has maintained its overall position on the ranking this year, below Australia and ahead of Malaysia at 8th position. It also continues to be a "net overachiever", where its influence exceeds its resources.

“It’s really impressive that all the Southeast Asian countries are doing so well and rising in power,” said Professor Baipai. “It does suggest it has something to do with the economic regimes of these countries. It looks like they will continue to be an enormous force for economic transformation and dynamism in Asia for a very long-time. ”

View the full recording of the launch of the Asia Power Index 2019.

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