Indo-Pacific's middle powers build networks that rival US-China blocs

SINGAPORE, 20 AUGUST 2026 —

Middle powers including Japan, India and Australia are reshaping the Indo-Pacific by building supply-chain networks, technology standards and minilateral pacts rather than relying on military blocs, according to a Lowy Institute analysis.

Japan's push for a Free and Open Indo-Pacific and Australia's leadership in the Quad and AUKUS show how middle powers are creating flexible partnerships across security, supply chains and digital infrastructure, the authors write.

These initiatives allow countries to cooperate on specific challenges without rigid political alignment, enabling regional influence to flow through networks rather than formal blocs, the report argues.

Southeast Asian states are central to this shift. Singapore's role as a financial and tech hub, Vietnam's rise as a manufacturing magnet and Indonesia's diplomatic leadership inside ASEAN demonstrate how economic and institutional clout now rivals hard power.

The authors note that supply chains in semiconductors, critical minerals and artificial intelligence have become the new centres of gravity in the region.

India illustrates the strategy by deepening security ties with the United States through the Quad while remaining active in BRICS and the Shanghai Cooperation Organisation, the report says.

Japan's influence extends beyond military strength into rule-making. Tokyo has shaped norms on supply-chain resilience, rule of law and freedom of navigation despite demographic challenges and constitutional constraints, the authors argue.

Australia balances a close alliance with Washington against deep trade links with Asian markets, investing in flexible cooperation that reflects broader minilateral trends.

For Malaysian business, the trend means supply-chain resilience and adherence to new regional standards will increasingly determine market access beyond the US-China duopoly, the authors say.

The report rejects the notion that the Indo-Pacific is moving toward a simple bipolar US-China order. Instead, it describes a more complex system where influence is dispersed across middle powers, institutions and partnerships.

European countries are taking note. Finland's recent adoption of Indo-Pacific Policy Guidelines shows wider recognition that developments in the region shape global economic security, the authors write.

Viewing the Indo-Pacific solely through US-China rivalry risks overlooking how middle powers set the rules on technology, logistics and maritime governance, the report warns.

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