Chinese influence may approach peak this decade, says Lowy Institute’s Asia Power Index

China has ‘no clear path to undisputed primacy’, according to the Lowy Institute’s annual Asia Power Index.

Australia’s ‘diplomatic influence’ fell 3.7 per cent amid concerns among Southeast Asian nations over the AUKUS pact. Picture: AFP

China’s power has declined relative to that of the US, with the Lowy Institute’s annual Asia Power Index finding its growing capacity constraints and falling diplomatic cultural influence provide “no clear path to undisputed primacy in the Indo-Pacific”.

The US again topped the index, drawing away from China by a net 2.1 per cent on the strength of its international ­coalition building and domestic renewal, and China’s 1.5 per cent rating slump.

Australia’s rating dipped by 1.6 points, but the nation came in at an unchanged sixth position in the regional power table, after the US, China, Japan, India and Russia, ahead of South Korea, Singapore, Indonesia and Thailand.

China’s fall in “comprehensive power” was its first in four editions of the institute’s Asia Power Index, while the US defied a prevailing downward trend to register a 0.6 per cent rise in its rating.

“On current trends, Beijing is now less likely to pull ahead of its peer competitor in comprehensive power by the end of the decade,” project leads Herve Lemahieu and Alyssa Leng said. “Importantly, this change suggests that there is nothing inevitable about China’s rise in the world.”

China’s rating fall was heavily influenced by the impact of growing structural weaknesses, including its rapidly ageing population, uneven water distribution, heavy debt load, and “a political system that spends more on projecting power inward, on internal security challenges, than it does on projecting it outwards”.

The researchers found the pandemic drove down the power ratings of almost all states, weakening their ability to influence their external environment.

The US defied the regional downswing, with a 0.6 per cent rise in its rating, gaining a “remarkable” 15.5 points in its diplomatic influence due to a bounce back in its global relationship-building after Joe Biden’s election.

“Notwithstanding the reality of China’s rise, America remains a highly dynamic superpower,” the Lowy researchers found. “It now tops six of the Index’s eight measures, up from four in 2020. No other country exerts greater, more multidimensional power.”

The analysts warned “Asia’s deepening security dilemma presents a significant risk of war”.

Australia scored 1.1 points higher in its “resilience” this year, but its “economic relationships” rating slumped 4.9 points due to the impact of Chinese trade bans.

Australia’s “diplomatic influence” fell 3.7 per cent amid concerns among Southeast Asian nations over the AUKUS pact with the US and UK.

“Despite coming under sustained trade sanctions by its primary trade partner, Australia has improved its resilience in 2021,” the project found.

“The damage wrought by Chinese trade restrictions has been largely offset by untouched iron ore exports to China and trade ­diversion in other sectors.”

The index takes in 131 indicators across eight categories: military capability and defence networks, economic capability and relationships, diplomatic and cultural influence, together with resilience and future resources forecasts.

While China was Asia’s undisputed second-ranked power, the researchers found “China’s rise relative to the US is more fragile than many may believe, including those in the one-party state”. The index paints a picture of a bipolar region, with Japan and India behind China, and Australia more reliant on the US.