Asia Forecast: Key Trends in 2022

Introduction

For the past 10 years, CSIS has brought together its leading experts on Asian politics, security, economics, and trade to provide annual previews of developments across the region in an event known as “Asia Forecast.” Panelists explore key questions about the trajectory of the region by surveying the audience in an interactive format designed to stimulate dialogue on current events. The following commentary highlights key predictions from this year’s Asia Forecast held virtually on January 27, 2022.

Politics and Leadership

Prediction 1: South Korea’s presidential election will impact Asian geopolitics.

A plurality of the audience thought that the U.S. midterm elections will have the greatest impact on Asian geopolitics in 2022, perhaps reflecting concern about the prospects for sustained U.S. leadership in the region. However, Michael J. Green argued that even if control of Congress shifts, bipartisan support for Asian allies is already well established and will remain the norm. Aside from U.S. political dynamics, participants predicted that South Korea’s presidential election will impact geopolitics and U.S. strategy in Asia. Victor Cha remarked that key differences in the foreign policy views of the two South Korean presidential candidates could affect South Korea’s relations with the United States and its neighbors in significant ways. Cha observed that Governor Jae-myung Lee, the ruling Progressive Party candidate, supports a more delicate balance between the United States and China, while the opposition conservative People Power Party candidate, Yoon Seok-youl, supports taking a firmer stance against China. Both candidates also differ on other issues, such as whether to resume joint military exercises with the United States or approve the transfer of wartime operational control (OPCON) from the United States to South Korea.

Prediction 2: Japan-South Korea relations will improve.

Both CSIS experts and the audience agreed that Japan-South Korea relations will improve in 2022. Cha pointed out that there is an appetite in South Korea to improve relations with Japan, exemplified by Governor Jae-myung Lee projecting a more positive outlook compared to earlier in the race. In addition, the Moon administration has reconfirmed the 2015 comfort women agreement between Japan and South Korea, and the South Korean supreme court has dismissed cases about comfort women and forced labor, potentially providing a foundation for improved relations. Yuko Nakano also noted that Japanese leaders understand it is in their nation’s interest to cooperate bilaterally with South Korea, and trilaterally with the United States, to address rising security concerns from China and North Korea. However, both Cha and Nakano anticipate that improving relations will depend on the domestic political environment and public opinion in both countries.

Prediction 3: A Russian invasion of Ukraine will rattle Asian leaders’ confidence in the United States.

CSIS experts in all three panels suggested that a Russian invasion of Ukraine will impact Asian leaders’ strategic thinking about U.S. credibility and commitment to Asia. Charles Edel argued that the United States is in a precarious position: If pulled into a conflict in Europe, many Asian leaders will be concerned about whether the United States will remain focused on Asia. However, a weak U.S. response could signal that the United States is less willing to defend the rules-based order. Rick Rossow also posited that an invasion will impact the Biden administration’s interest in applying Countering America’s Adversaries Through Sanctions Act (CAATSA) sanctions on India for its purchase of air defense missile systems from Russia, as well as India’s overall relationship with Russia. Both Jude Blanchette and Bonny Lin observed that Xi Jinping would scrutinize the U.S. response to a military conflict between Russia and Ukraine to predict how the United States may react should China take military action against Taiwan, but Lin also noted that Xi appreciates the difference between circumstances in Ukraine and Taiwan.

Security

Prediction 4: China is not likely to use military force against Taiwan this year.

Sixty-three percent of participants thought the chances of China using military force against Taiwan this year are less than 20 percent. This tracked with last year’s result (61 percent ) despite increased media attention focused on the potential for a Chinese attack. Lin argued that China is not likely to launch a full-scale invasion this year because there will be no significant domestic political change in Taiwan to impact Xi’s motivations for reunification until the late 2022 midterm elections. Moreover, Xi would want to ensure victory, but China does not necessarily have the capabilities to guarantee that outcome. Greg Poling posited there is a chance China may use military force on a smaller scale to seize one of Taiwan’s offshore islands before the 20th Party Congress scheduled for late 2022. However, Lin stressed that the potential benefits are far outweighed by a diplomatic backlash that could rally support against China and make a full-scale invasion of Taiwan more difficult.

Prediction 5: Security cooperation under the Quad and AUKUS will advance in 2022.

A plurality of respondents predict the United States, Japan, Australia, and India will accelerate security cooperation under the Quad construct this year. Nicholas Szechenyi observed that election of the Quad to a leaders’-level dialogue and the likelihood of a second in-person gathering in Japan this spring could produce concrete initiatives on security, but Poling noted that there is not much evidence to suggest India is willing to deepen security cooperation specifically. Lin and Poling, together with 31 percent of the audience, expect deepened security cooperation between the United States, Australia, and the United Kingdom under the new AUKUS agreement to demonstrate that AUKUS is about much more than the submarine deal and should become a robust framework for military cooperation. While some in the audience believed security cooperation between China and Russia will deepen in light of increased joint military exercises, Lin expects the relationship to grow incrementally with no concrete objectives compared to AUKUS or the Quad.

Prediction 6: The 20th Party Congress will make China more belligerent.

A majority of participants predicted that China will become more belligerent after the 20th Party Congress this year. Lin pointed out that Xi Jinping has a greater tolerance for risk than his predecessors and will pursue an even more aggressive foreign policy after he secures a third term and consolidates his power. Poling also expects increased belligerence under the assumption that the Chinese Communist Party (CCP) will reinforce Xi’s nationalistic behavior. Regarding other developments at the 20th Party Congress, Blanchette and Lin expect new additions to the CCP’s Taiwan policy, with Lin observing that new language from China points to more specific discussion on what will happen post-reunification.

Economics and Trade

Prediction 7: There will be more export controls and technology decoupling between the United States and China in 2022.

A plurality of participants believed that further export controls and technology decoupling will dominate U.S.-China economic relations this year. William Reinsch expects the United States to aggressively enforce current export control laws against China in 2022 as more Chinese companies are added to the entities list. The United States continues to work with European and Asian allies on protecting critical technologies as China promotes technology self-reliance, but Matthew Goodman observed that collective action to counter Chinese economic coercion could be difficult to organize in the near term and Scott Kennedy questioned whether such action would change China’s behavior. Whether this competitive dynamic will extend into the financial sector is less certain. Kennedy stated that there have been no new Chinese initial public offerings (IPOs) in the United States, and he expects almost no new venture capital deals in either direction. But Stephanie Segal does not see signs of decoupling in the financial sector and referenced portfolio inflows to China and the global nature of capital flows as evidence to the contrary.

Prediction 8: Asia will remain cautious about President Biden’s Indo-Pacific Economic Framework (IPEF).

Two-thirds of the audience believed that the region will take a wait-and-see approach when it comes to the Biden administration’s proposed Indo-Pacific Economic Framework (IPEF). Though there will be interest from countries with close ties to the United States, such as Australia, Japan, New Zealand, Singapore, and South Korea, Reinsch expects other countries in the region to be unsure about whether they will derive tangible economic benefits from participating in the IPEF. Increased U.S. market access is not up for consideration, and some countries are concerned that if IPEF does not require congressional approval, the United States might not be willing to make any major concessions. Kennedy also suggested that hesitancy, including from regional allies and partners, is also in part due to U.S. partisan politics, with many countries unsure if the IPEF will endure beyond 2024.

Prediction 9: China’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP) will gain slow momentum.

While 51 percent of the audience believed that China’s bid to join the CPTTP is not going to gain traction, Goodman warned that China’s bid is a serious risk to the United States, predicting that it will gain slow momentum in 2022. Though the process of accession may take several years, Goodman pointed out that in the interim China is likely to be invited to join CPTPP meetings as an observer, a powerful position that offers China a window into the views of the other parties. Reinsch predicted that to gain entry China will most likely promise to meet the conditions of the CPTPP and then renege on its promises while bullying existing members into lowering their standards. Kennedy also emphasized that though the bid could “go nowhere” in the short term due to interference from U.S. allies such as Japan, China’s bid could become more viable if the IPEF stalls and it becomes clear that the United States does not have a well-defined economic strategy for Asia.

Panelists (in order of appearance)

Michael J. Green, Senior Vice President for Asia, Japan Chair, and Henry A. Kissinger Chair, CSIS; Director of Asian Studies, Georgetown University

Victor D. Cha, Senior Vice President and Korea Chair, CSIS; Professor and Vice Dean for Faculty and Graduate Affairs and D.S. Song-KF Professor of Government, Georgetown University

Charles Edel, Australia Chair and Senior Adviser, CSIS

Yuko Nakano, Fellow, Japan Chair, and Associate Director, U.S.-Japan Strategic Leadership Program, CSIS

Richard M. Rossow, Senior Adviser and Wadhwani Chair in U.S.-India Policy Studies, CSIS

Jude Blanchette, Freeman Chair in China Studies, CSIS

Bonny Lin, Director, China Power Project, and Senior Fellow, Asian Security, CSIS

Gregory Poling, Senior Fellow and Director, Southeast Asia Program and Asia Maritime Transparency Initiative, CSIS

Nicholas Szechenyi, Senior Fellow and Deputy Director, Japan Chair, CSIS

Matthew P. Goodman, Senior Vice President for Economics, CSIS

Scott Kennedy, Senior Adviser and Trustee Chair in Chinese Business and Economics, CSIS

William A. Reinsch, Senior Adviser and Scholl Chair in International Business, CSIS

Stephanie Segal, Senior Associate (Non-resident), Economics Program, CSIS

Hannah Fodale is an associate fellow with the Japan Chair at the Center for Strategic and International Studies in Washington, D.C.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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