he Covid pandemic has driven down the power of Asian giants like China and India in the Indo-Pacific region and has weakened their capacity to shape the external environment, the Lowy Institute said in a report.

The report said that while leading Asian countries witnessed a decline in influence, the US managed to expand its power through better diplomacy and retained its position as the most influential nation in the region, reported the Economic Times.

In its Asian Power Index for 2021, which ranks 26 nations and territories, the Sydney-based Lowy Institute said that China’s measure of power fell as the country wrestled with structural weaknesses in its demographics and financial system and become more isolationist.

Also read: India reiterates concern on terrorist entities gaining access to chemical weapons

According to the report, China lost ground in half of the Index’s measures of power in 2021 — from diplomatic and cultural influence to economic capability and future resources.

India, which is the fourth most powerful country in the region after US, Japan and China, was among the hardest hit nations in comparison to its pre-Covid growth paths.

The report said that India saw a loss of ranking in critical parameters like diplomatic influence and economic relationships in the last one year.

India, however, retained the fourth place in other measures of power such as economic capability, military capability, resilience and cultural influence.

Compared to Asian powers, US gained more influence in the continent this year due to President Joe Biden’s administration brokering better diplomatic relationships and a speedy recovery from the pandemic with the help of vaccinations.

According to the report, US defied the prevailing regional downward trend to register its first annual gain in comprehensive power in four editions of the Asia Power Index since 2018.

It has also witnessed a remarkable gain in diplomatic influence this year, albeit starting from a low point set by the former Trump administration.

Also read: India's first military chief among 13 dead in chopper crash

Overall, Washington topped six of the Index’s eight measures in 2021, up from four last year.

US allies in the region and key balancing powers such as India have never been more dependent on American capacity and willingness to sustain a military and strategic counterweight in response to China's rise, the report said.

It said the region's deepening security uncertainties present a "significant" risk of war.

"The depth of hostilities, the breadth of US–China competition and the presence of multiple potential flashpoints means the risk of war is significant."

However, the report said that despite tangible gains in 2021, US continues to face deep-seated structural challenges in its competition with China.

Notably, America's improvements relative to China across four measures of power have been undermined by losses elsewhere, including a drop in parameters such as military capability and economic relationships.

The report said the pandemic's impact on developing economies like India has the potential to reinforce bipolarity in the Indo-Pacific region, driven by the growing power differential of US and China.

It said that Japan and India, the two with the most potential to contribute to a regional multipolar order, lost more ground in 2021 than China.

"Separated by oceans and vast demographic differences representing old and young Asia, Japan and India have nonetheless registered similar rates of decline since 2018," the think-tank said.

According to the index, both Tokyo and New Delhi now both fall just short of the major power threshold of 40 points and are ranked as middle powers.

India also lagged in economic diplomacy, dropping one place to finish eighth behind Thailand in the economic relationships measure.

The think-tank said that relative to its resources and potential, India has remained an "underachiever" in the Indo-Pacific region.

"India’s rise as a truly multipolar power — able to match China’s military and economic capabilities — will take a decades-long effort, with no guarantee of success," the report said.

The think-tank said that while India has boosted its resilience and military capability in 2021, it has also been one of the hardest hit in comparison to its growth path prior to the pandemic.

Conversely, Japan has been an overachiever in Asia but remains in a long-term decline, the report said.

It praised Tokyo for making efficient use of its limited resources to wield broad-based diplomatic, economic and cultural influence in the region.

Furthermore, countries like Australia, Singapore and South Korea have more influence than their raw capabilities would indicate, the report said.