A New Hope for US Leadership in the Indo-Pacific

Among the many unknowns that will be shaping 2025, there are two certainties that stand out. One is that the Republicans will be dominant on the U.S. political scene next year. The second is that for all the angst governments across the Indo-Pacific may have about the United States moving forward, there is little appetite in the region to decouple from Washington. For the incoming U.S. administration, those two facts provide a solid foundation for Washington to exert itself as an Indo-Pacific power.

Granted, the United States and indeed the world have changed considerably since then-President Barack Obama’s 2012 speech calling for a U.S. pivot to Asia. What’s more, many would argue that the subsequent rebalance to the region and the launch of a U.S. Indo-Pacific strategy have done little to achieve the primary goal, namely to stave off China’s dominance. Certainly, the reality has been that – far from losing influence – Beijing’s economic as well as military capabilities have surged and its own vision for a Chinese-led order, especially with the Global South, has only gained currency over the past decade.

What has not changed, however, is that as China’s influence and ambitions have grown, regional expectations for continued U.S. engagement in the region have remained strong. That is not to say countries across the Indo-Pacific are looking to choose sides and pick Washington over Beijing, as many U.S. policymakers had initially hoped for. But as China’s own economic trajectory shows signs of weakness and the unrelenting brutality of Beijing’s authoritarian rule is highlighted, the risks of Chinese regional dominance have become apparent. Continued U.S. engagement and increased commitment to the region not only means more options, but Washington’s presence itself becomes a hedge against overwhelming Chinese hegemony.

From the crackdown in Hong Kong to the suppression of the Uyghurs to oppression in Tibet, China’s unyielding pursuit of its so-called core interests through subjugation is nothing new. What’s more, violations of human rights and authoritarian crackdowns have all too often been ignored or dismissed by foreign governments, including the United States, over the years. On the other hand, China’s economic suppression and power plays have caused alarm and backfired against Beijing in recent years. The weaponization of economic dominance through coercive action and the downside risks of relying on Chinese capital investments have highlighted the high cost of doing business with Beijing.

This opened the door for the United States to step in, except Washington hasn’t seized the opportunity to date.

A fundamental weakness of U.S. policy in the Indo-Pacific remains the lack of a comprehensive strategy that would lead to greater growth and resilience to the economies in the region. While going toe-to-toe with China’s Belt and Road Initiative (BRI) was never in the cards, Washington did not meet the challenge posed by the BRI, which would have required reassessing the United States’ own development assistance strategy. The end result has been that while relying on Chinese investments may hardly be ideal, an alternative source of financing is all too often lacking.

In short, there is an opportunity for the second Trump administration to seize the moment and encourage more investments in the Indo-Pacific, which remains the most economically robust region in the world. Providing the capital and political support needed to the U.S. Development Finance Corporation could offer U.S. businesses the guarantee as well as political backing needed to take on greater risks in the region. It could be a win-win insofar as it would enhance the presence of U.S. businesses in the Indo-Pacific and push back against Chinese domination in the region as well.

The incoming Trump administration is expected to focus on greater efficiency and be more pro-business. Those goals align with the needs of the emerging markets of the Indo-Pacific, which are seeking investments from sources outside of China and could also potentially lead to greater de-risking from China as well. While there are concerns about the new U.S. administration becoming more protectionist, it is also a government that will have corporate executives and financiers shaping economic policy. That should be an opportunity for Washington to turn its weaknesses until now into a strength, by focusing on U.S. investment opportunities that in turn would decrease the allure and strength of China.