This annually-announced index, launched by the Lowy Institute in 2018, assesses resources and influence to rank the relative power of states in Asia. It maps out the existing distribution of power as it stands today, and tracks shifts in the balance of power over time.
The Superpower Showdown: China Vs United States
The fierce competition between Beijing and Washington is at the heart of Asia’s power contest.
China’s rise has hit a plateau, mentioned the report. Once deemed as a potential hegemon in the region, China’s economic capability has flatlined owing to slower economic growth and structural challenges.
As far as power projection in Asia is concerned, China’s military advancement has helped it maintain its influence. However, the weakness in economic and defence networks restricts its ability to fully capitalise on its resources.
On the flip side, the report noted that the United States remains resilient. Of eight parameters, Washington is ahead of China on six, including defence networks and diplomatic influence.
Though Beijing has been closing the military gap since 2018, American alliances with Japan, South Korea and Australia have given it a solid footing in Asia. In essence, the US continues to exert unmatched influence in Asia.
India’s slow, steady ascent
New Delhi became the third-ranked power in Asia by overtaking Japan. The report also indicates that the country’s comprehensive power has grown incrementally, particularly after the post-COVID economic recovery.
With the surge in its economic capability by 4.2 points, the country has improved its standing. However, its performance doesn’t completely align with the ‘India rising’ narrative.
India’s low integration into Asia’s border economic architecture has hindered the country’s ability to project power. New Delhi’s influence largely stays confined to its immediate neighbourhood, east of the Malacca Strait.
The report also expects the country’s youthful population to provide a demographic dividend, in contrast to Beijing’s rapidly ageing workforce, prompting that India has more room for growth in the long term.
However, in terms of defence networks, New Delhi slipped to 9th place, showcasing a cautious stance towards enhancing security cooperation, especially in the US-led alliances.
Japan’s strategic shift
Once known for its economic and cultural might, Japan is increasingly focusing on defence and security. It has ramped up its military spending under the leadership of former Prime Ministers Shinzo Abe and Fumio Kishida and is stepping up as a regional security provider.
To bolster its regional influence, the country also signed a Reciprocal Access Agreement with the Philippines in 2024.
However, the report notes, that Japan’s economic capability continues to decline, considering technological competition from South Korea and China. Its ageing population could further erode the country’s ability to sustain its historical leadership in the region.
Southeast Asia’s silent growth
Interestingly, Indonesia and the Philippines, Southeast Asia’s two largest economies, are experiencing robust growth. In the report, Indonesia has gained more power than any country since the inception of the Asia Power Index in 2018, rising by 11%.
Jakarta’s chairmanship of ASEAN in 2023 boosted its diplomatic influence, and its growing technological sophistication enhanced its economic capability.
Meanwhile, the Philippines jumped to the 15th position in the index, overtaking Pakistan. Manila’s growing military cooperation with the United States, coupled with a strategy of diversification towards US-aligned partners, has allowed the country to increase its regional influence.
Australia: Holding steady
As per the report, Australia moved up to fifth place, surpassing Russia, which witnessed a decline in influence since its invasion of Ukraine. Capitalising on its strong defence networks, especially with the US and Japan, it remains a highly influential middle power.
Conclusion: The future of power in Asia
The Lowy Institute’s Asia Power Index paints a complex picture of power dynamics in the region. Beijing and Washington remain the most crucial players, but China’s plateauing influence provides opportunities for other powers like India and Japan to assert themselves.
New Delhi’s rise, though slow, is significant and has long-term potential due to its demographic dividend. Southeast Asia’s growing influence, particularly from Indonesia and the Philippines, highlights the shifting balance of power in the Indo-Pacific.