The United States remains the most powerful nation in Asia “due largely to China’s setbacks,” according to a survey published today the Australia-based Lowy Institute.
Lowy’s Asia Power Index found that “China’s isolation exacted a heavy toll on its standing in 2022 but the country emerges more militarily capable than ever.”
“The portrait that emerges is this: China’s overall power still lags the United States but is not far behind,” Lowy said.
The report was released against the backdrop of the U.S. downing of a suspected China spy balloon that flew over key American military sites last week. The flight and uproar have been a focus of U.S. media attention for days and will add pressure to U.S.-China relations already facing strains over geopolitical issues including Taiwan.
The economic stakes for the U.S. and other nations in Asia are big. The region is home to what are expected to be some of the world’s fastest-growing economies this year (see related post here). Benchmark stock indices in Hong Kong and the mainland fell today over uncertainty about the business fallout from new U.S.-China tension.
“The incident reminds investors (of) the geopolitical risks now prevalent when investing in China,” Hao Hong, CFA at the Grow Investment Group in Hong Kong said by email. “That said, the timing of the incident is odd, and the reporting of the incident is littered with question marks. It shows that even though China has (been) trying hard to mend the international relationship since its Covid pivot, confidence will take time to come back.”
Lowy’s Asia Power Index measures resources and influence to rank the relative power of states in Asia. It ranks 26 countries and territories in terms of their capacity to shape their external environment through 133 indicators across military capability and defense networks, economic capability and relationships, diplomatic and cultural influence, as well as resilience and future resources.
The top five countries ranked – the U.S., China, Japan, India and Russia – all had lower “comprehensive power scores” than a year earlier.
“Yet the biggest surprise over the course of five editions of the Index has been China’s inability to close or meaningfully narrow the gap to equal, let alone surpass, the United States in its comprehensive national power,” Lowy noted.
“The United States has maintained a narrow if durable edge as the leading superpower over the past half decade. Washington’s own descriptor of Beijing as a near-peer competitor may hold indefinitely. On current trends, China is now less likely to pull ahead of its rival in comprehensive power by the end of the decade. Even if it does in future decades, it appears highly unlikely China will ever be as dominant as the United States once was. China draws power from its central place in Asia’s economic system. The United States draws its power from its military capability and unrivalled regional defense networks.”
Among the report’s other main findings, Lowy said “patchy power” India has made an uneven strategic contribution to the regional balance. Elsewhere, it said, “the clock is ticking on Japan’s ‘smart power’ influence.”
Lowy also found “Southeast Asia is more diplomatically dynamic than ever” and that “Russia, despite its legacy of defense ties with Asia, risks growing irrelevance.”
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