The U.S.-China Competition Defining Asia's Future

As debates over power dynamics in Asia intensify, analysts present varying viewpoints on the region's balance of power. Some argue that China has become an unbeatable force, dominating the region. Others hold fast to the belief that U.S. power remains supreme, with China vulnerable and containable. Meanwhile, a third group, including U.S. allies like Australia and Japan, push the idea of an emerging multipolar Indo-Pacific, where regional powers prevent China from achieving hegemony. However, none of these views fully encapsulates the current state of play in Asia.

The reality is that Asia today is marked by a unique bipolarity, with the United States and China dominating the region as peer competitors. This is not a multipolar landscape like Europe, where several powers share influence, nor is it the chaotic multipolarity of the Middle East. Rather, most countries in Asia are hedging between two superpowers, balancing their interests between Washington and Beijing. Understanding this bipolar dynamic is essential to crafting an effective U.S. strategy for dealing with China.

The Lowy Institute’s Asia Power Index offers a more nuanced view of power in the region by measuring not just economic size but also military capability, national resilience, and future demographic and economic potential. According to the index, the United States remains roughly 10% more powerful than China in Asia. China surpassed the threshold often associated with a power transition in 2018 when its strength approached 80% of that of the United States, but the nature of this power dynamic is not one of China eclipsing the U.S. Rather, both powers are using different tools to exert influence—Washington leveraging security alliances and Beijing focusing on economic relationships.

In Europe, Russia’s hopes of weakening U.S. support for Ukraine have not materialized, and the region remains securely multipolar. The Middle East, meanwhile, continues to be a battleground for several regional and extra-regional players, but no single power holds dominance. Asia’s bipolarity, in contrast, provides relative stability for now. This dynamic enables the United States to protect its core interests, prevent China from disrupting the regional order, and maintain its economic ties with key markets.

However, the idea of a multipolar Indo-Pacific, promoted by some analysts and regional governments, is more illusion than reality. Countries like India and Japan, often touted as pillars of a multipolar Asia, simply do not have the economic or military capability to match China. India’s influence east of the Strait of Malacca remains limited, and Japan’s regional power, particularly in terms of economic relationships, has been steadily shrinking. Despite their cultural and diplomatic influence, neither country comes close to challenging China in economic terms, with Japan at 40% of China’s influence and India at a mere 15%.

Hopes that the Indo-Pacific could act as a buffer against China’s rise have also faltered. Without U.S. support, no regional power would be able to counter China’s dominance. The Biden administration has emphasized its "latticework of alliances" in Asia, but the U.S. security network in the region remains largely unchanged since the end of the Cold War. While these alliances—particularly with Japan, South Korea, and Australia—have deepened, they are not enough to significantly shift the balance of power. Asian countries continue to rely heavily on U.S. military guarantees, and any conflict with China would place enormous pressure on these alliances to maintain access and operational capacity.

Despite efforts to strengthen these alliances through increased military exercises and defense cooperation, their real-world impact is limited. For instance, Australia, Japan, and South Korea combined have less than a quarter of the U.S.’ missile launch capabilities. Similarly, their defense budgets amount to less than a fifth of that of the United States. While these alliances offer strategic advantages, such as enhanced military access and signaling to Beijing, they do not provide the decisive military edge that Washington might hope for in a conflict with China.

One notable trend is that many of these new security initiatives, such as AUKUS and Japan’s expanded military cooperation with the U.S., were driven by U.S. allies rather than Washington itself. These efforts reflect a desire to anchor U.S. power in Asia, especially at a time when the U.S. has become more selective about where it exerts its global influence. Nevertheless, Washington’s reluctance to fully share defense technologies and strategic plans with its allies suggests a tacit acknowledgment that these partnerships alone cannot fundamentally alter the balance of power in the region.

In many ways, Asia’s bipolarity benefits the United States by preventing any one power from dominating the region. The fundamentals of U.S. power in Asia remain solid. Its advantages in undersea warfare, long-range strike capabilities, and technological innovation continue to outpace China’s advancements. Even in areas where China has made rapid progress, such as electric vehicles, the U.S. remains a global leader in innovation and economic resilience. China’s economic growth faces significant long-term obstacles, including an aging workforce, declining demographics, and an over-reliance on state control.

The relative stability brought about by bipolarity is often underappreciated. While there are clear flashpoints in Asia—particularly Taiwan and the South China Sea—the fact that these tensions have not escalated into broader conflicts is telling. Contrast this with Europe, where Russia’s invasion of Ukraine has reignited conflict, or the Middle East, where the war in Gaza has the potential to escalate into a wider regional war. The restraint shown by both the U.S. and China in Asia, despite their competition, has helped maintain peace.

However, Asia’s current stability does not mean the region is immune to conflict. Countries across the region should be aware of the risks, and the United States must remain vigilant. If Washington were to pull back from Asia, China would still face numerous challenges in asserting regional dominance. Its disputes with neighbors like Vietnam, the Philippines, and Japan would likely intensify, and the prospect of a nuclear arms race—particularly if countries like South Korea or Japan sought nuclear capabilities—would add further instability.

The bipolar nature of Asia allows most countries to hedge their bets, avoiding alignment with either superpower. For nations like Singapore and Vietnam, this flexibility is key to maintaining their independence. Vietnam, in particular, has benefitted from the U.S.-China competition by positioning itself as an intermediary between the two giants. However, there are worrying signs that some countries in Southeast Asia are beginning to shift more decisively toward China, raising questions about the long-term balance of power in the region.

Countries like Indonesia, for example, view China as their most important economic partner, while Malaysia has taken steps to align more closely with Beijing. China’s influence in Cambodia, where it is set to secure military access, highlights the growing presence of Beijing in the region’s nonaligned nations. While U.S. allies are rallying around Washington, there is a sense among some that the U.S. is a distant and unreliable partner.

The United States must avoid overestimating its alliances and focus on its own strengths. While primacy in Asia may no longer be achievable, the U.S. can continue to play a critical role as a stabilizing force in the region. Strengthening military capabilities, particularly in naval power, and deepening economic and diplomatic engagement with nonaligned nations will be essential. Maintaining this bipolar balance is the best way to ensure that Asia remains stable, allowing both the U.S. and China to coexist without pushing the region toward conflict.