Emerging powers in Asia will play a role in keeping global 'polycrisis' in check

If there is one word that best captures the dominant theme at this year’s World Economic Forum in Davos, it is “polycrisis”. A new buzzword popularised by the British historian Adam Tooze, who gained world renown for his magisterial account of the 2007-2008 Great Recession, polycrisis refers to the unprecedented convergence of several crises with global consequences, thus undermining the efficacy of conventional policy paradigms.

In the past, the world had to contend with a single major crisis with global ramifications: think of, for instance, the First World War originating from Europe or the Great Recession from the Wall Street and subprime crisis in the US. In contrast, today we deal with crises ranging from the economic slowdown in China to Federal Reserve interest rate rises in the US and the impending recession in Europe amid the war in Ukraine. The upshot is the increasing difficulty of accurately forecasting the trajectory of the world economy, and broader global order, in the coming months and years.

When it comes to Asia, however, there are three big trendlines that will define the geopolitical landscape this year and beyond: the trajectory of Sino-American competition; Japan’s military build-up and growing co-operation with likeminded middle powers; and the role of non-aligned emerging powers such as India (this year’s G20 president) and Indonesia (this year’s Asean chairman).

By all indications, the US and China are not the same superpowers they used to be. Following decades of military interventions abroad, and growing political polarisation and economic imbalances at home, Washington no longer wields the same kind of full-spectrum hegemony on the global stage.

America’s share of the global economy has steadily shrunk over the past half century, while its military edge over rivals is gradually receding. On its part, China is now confronting a shrinking population as well as a slowing economy. The heady days of double-digit growth are now history, with the Asian juggernaut grappling with structural challenges such as rising wages, declining productivity, huge public debt, and a politically active middle class.

If anything, China now risks falling into what economists describe as a middle-income trap, namely the struggle to sustain historically robust growth rates amid a difficult transition to a knowledge-based economy. As a result, leading emerging market experts such as Ruchir Sharma doubt whether China’s gross domestic product will catch up with that of the US before the end of this century.

Nevertheless, the US and China remain, by far, the world’s two most powerful nations in the Indo-Pacific region. According to the Lowy Institute Asia Power Index, which evaluates military, economic and diplomatic capabilities of all major regional nations, the overall power-influence scores of the US (82.2) and China (74.6) place them well ahead of their closest rivals such as Japan (38.7), India (37.7), Russia (33), and Australia (30.8).

After years of constant sabre-rattling, including as escalating trade war and growing military tensions in the Western Pacific, the two superpowers explored a detente in the G20 summit last November. But given the depth of geopolitical differences between them, it’s imperative that they double-down on institutionalised dialogue and constructive engagement in the coming months.

US Secretary of State Antony Blinken is expected to visit Beijing later this year in order to examine the parameters of co-operation and, if possible, a major reset in relations. A state visit either by US President Joe Biden or Chinese President Xi Jinping could follow through. This month, Chinese Commerce Minister Wang Wentao underscored his country’s commitment to “continuously improve" relations with Washington, provided “the US side will take a correct view of the opportunities that China's development brings to the US and the world, and follow the direction set by the two heads of state to push China-US economic and trade relations back on track at an early date".

After a months-long hiatus, especially following former US House of Representatives speaker Nancy Pelosi’s controversial visit to Taiwan, the two powers have also resumed dialogue on climate change negotiations. It’s crucial for the two superpowers to fully restore, and accordingly expand, institutionalised channels of communications on other vital areas of concerns, including nuclear proliferation, terrorism and free trade.

Avoiding military confrontation over hotpsots such as the South China Sea and Taiwan will be a top priority. Before the end of this year, we will probably know whether the US and China are in position to pursue “coopetition” (co-operative competition) or are bound to be locked into a “new Cold War” for the foreseeable future.

The second major development to watch out for this year is the direction of Japan’s foreign and defence policy. Boasting the world’s third-largest economy, and equipped with one of the most modern armed forces in Asia, Japan will be vital to shaping the future of the Indo-Pacific region. Over the past month, Tokyo released a new National Security Strategy, which signals a more proactive defence policy with growing focus on “counter-strike” capabilities, including the development of sophisticated missile defence systems.

Over the next five years, Japan is set to double its defence spending as a share of GDP, deploying a $315 billion budget to transform its Self Defence Forces for 21st-century warfare. Signalling growing independence from the US, it is also pursuing a next-generation fighter jet project, under the Global Combat Air Programme, with Italy and the UK. The country is also finalising defence agreements with Australia, Germany, the UK, Canada and other likeminded powers in order to enhance military interoperability and, accordingly, its capacity to project power across the Indo-Pacific.

Given its militaristic past, Japan’s military build-up is likely to trigger backlash in neighbouring countries such as China and South Korea. But much of the West and the Indo-Pacific region have either publicly or privately welcomed a more proactive foreign policy. If anything, the Japanese public is also increasingly supportive of revising the country’s post-Second World War pacifist constitution amid growing uncertainty in the regional geopolitical landscape.

The third major element that will shape Indo-Pacific geopolitics in the coming months is the role of non-aligned powers such as India and Indonesia.

Though they are democratic nations with relatively warm ties with the West in recent years, both India and Indonesia have remained adamantly neutral amid the conflict between the West on the one hand and Russia and China on the other. Accordingly, both Asian countries have refused to back western sanctions either against Moscow or Beijing.

Eager to maintain an equidistant relationship with all major powers, and insulate their own populations against global uncertainty, India and Indonesia are more concerned about disruptions to the global economy and commodity markets due to unilateral western sanctions against rival powers in the East. To this end, both countries are expected to leverage their growing international influence to rally the so-called Global South, nudge the West towards dialogue with Russia and China, and establish a more inclusive, multipolar security architecture in the Indo-Pacific.

In short, the coming months will be shaped as much by rival superpowers as non-aligned emerging powers in Asia, especially as everyone seeks to mitigate the deleterious impact of a world in polycrisis.