New Report: US Most Powerful in Asia but Faces Challenges From China

May 8, 2018 Updated: October 8, 2018

Among the major players in the Asian region, the United States is currently the top-ranking nation, but it will face more challenges as China’s influence grows, according to a new report.

The Lowy Institute, a think tank based in Australia, on May 8 launched its first edition of the Asia Power Index, measuring 25 countries and territories on eight indicators of power: economic resources; military capability; resilience, the ability to deter real or potential threats to state stability; future trends in economic, military, and demographic resources through 2030; diplomatic influence; economic relationships; defense networks, the ability to ally with other countries to enhance military capability; and cultural influence.

The United States ranked first in most of the categories but fell behind China in diplomatic influence, economic relationships, and future trends.

Economic Influence

Hervé Lemahieu, a Lowy Institute research fellow and director of the Asia Power Index Project, explained that China’s use of “economic diplomacy” to buy influence has proven successful in the region. In particular, China’s One Belt, One Road (or Belt and Road) initiative, whereby the Chinese regime has actively partnered and invested in infrastructure projects in other countries, has leveraged China’s position as a key lender and source of foreign assistance in Asia.

The initiative comes with risks for partner countries. A recent report concluded that many countries could go bankrupt as a result of defaulting on loans from China.

For those countries, as they become increasingly reliant on China, the costs of pursuing economic policies independent of Beijing—a key factor in the “resilience” indicator—would grow ever higher. That may deter them from such trade ties with the Chinese regime in the future. “The risk goes both ways,” Lemahieu said. “Beijing is playing a high-stakes game in the region. If countries default on Belt and Road initiatives, that is a danger to China’s economic stability as well.”

Meanwhile, the United States “has been left out of the equation, partly out of its own doing,” Lemahieu said, citing the U.S. withdrawal from the Trans-Pacific Partnership (TPP) trade pact as an example. President Donald Trump said in a recent meeting with state lawmakers that he would reconsider joining the TPP.

Ultimately, Lemahieu said, the United States “needs a project or sign of leadership just as engaging to the region as Belt and Road,” such as directing more foreign investment in Asia and pursuing free trade agreements and other “rules-based order” initiatives that have proved successful in the past.

He also urged the United States to diversify trade ties in Asia, as trade with China makes up 46 percent of the United States’ trade in the region. Trade with the United States’ next highest-ranking Asian partner, Japan, makes up just 14 percent, according to the index.

Diplomatic Relations

Many countries are worried that the United States may retrench from the region; Japan, for instance, relies heavily on its military alliance with the United States for nuclear deterrence, but is concerned about the possibility that following U.S.–North Korea denuclearization talks, the country will withdraw its troops from the Korean Peninsula, Lemahieu said.

In early May, Trump assured that he would not offer to remove or reduce U.S. troops in future talks with North Korean leader Kim Jong Un.

Preparing for the possibility that the United States may not be the foremost power in Asia in the future, Australia, a major U.S. ally, has begun strengthening relations with its Asian-Pacific neighbors such as Singapore, Japan, and Indonesia.

Meanwhile, India’s “Act East” policy, which seeks to work with major players in Asia to create a strategic counterweight to China, has not yielded many results, Lemahieu said. China’s lucrative economic pull remains the priority for countries in the region.

However, Lemahieu said that ultimately, the United States’ defense alliances in Asia make the country far superior in military capabilities—a major problem for China.

China has only one—often unreliable—defense ally, North Korea, as very few Asian countries have chosen to align themselves with China’s security policies, largely due to China’s aggressive positions in geographical disputes. “China is still quite hemmed in by tense relations with neighbors,” Lemahieu said.

Other Categories

In terms of cultural influence, the United States also pulls far ahead. It is the preferred destination for university students in Asia, drawing about half a million students every year.

And while China has invested heavily in its state-run media’s overseas presence, American media remain far more influential. “It matters in shaping public opinion,” Lemahieu said.

In order for the United States to continue leading the global economy, Lemahieu said the country should continue investing in tech research and development (R&D) so it can maintain its tech edge. “That’s what the United States needs to compete,” he said.

The Chinese regime has been ambitious in its attempts to catch up with the United States, employing 1.6 million researchers in tech R&D, according to the index.

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