Unlocking Asia Pacific’s global leadership in sustainable development

CHRISTOPH NEDOPIL WANG and GLORIA GE

The Asia-Pacific region encompasses a vast geographical expanse, characterised by diverse landscapes, climates, cultures, religions, and economies. It is home to the world’s two most populous countries, India and China, as well as the Pacific Island countries, which comprise a significant area hosting many of the most isolated and smallest nations on Earth, such as Nauru and the Marshall Islands.

Against this backdrop of complexity, the Asia-Pacific region remains a cornerstone of global growth, with Asia projected to contribute to 60 per cent of global GDP growth in 2024. This resilience is rooted in the region’s remarkable economic progress over the past five decades, which has lifted hundreds of millions of people out of poverty and positioned several economies at the forefront of technological advancement in areas such as green energy, new energy vehicles, green finance, digital economy, agriculture and food. The Asia-Pacific region has a unique opportunity to become the world’s leader in sustainable development. However, the region faces pressing challenges that undermine its sustainable development potential. Foremost, these include climate change, democratic resilience, inclusive growth, shifting geopolitics, and tightening monetary conditions.

The Griffith Asia-Pacific Strategic Outlook (GAPSO) serves as a crucial platform for comprehending the multifaceted challenges and identifying opportunities within the region, addressing both local and global Sustainable Development Goal (SDG) priorities. To this end, the Griffith Asia Institute has collaborated closely with regional partners to identify and analyse megatrends and pathways for navigating the complexities of the Asia-Pacific region, with the overarching aim of unlocking the region’s potential to be the global leader in sustainable development.

We have identified six major themes – three regional and three sectoral themes that serve as cornerstone for fostering sustainable development leadership in Asia Pacific: green transition, inclusive growth and labour market as sectoral themes, and China, Pacific, Southeast Asia as regional themes.

While each theme necessitates specific forms of analysis and measures to drive sustainable development, we have identified four core recommended actions to accelerate Asia-Pacific leadership in sustainable development.

Core Recommended Action 1: Build trust          

Trust is the foundation of collaboration for sustainable development in Asia Pacific. While this should not come as a surprise, trust between nations and also within nations has deteriorated over the past decade. For example, while multiple Western nations including Australia were officially cooperating with China on the Belt and Road Initiative (BRI) in 2015, this is not the case in 2024. Dependence on China for trade and investment has increased in the region, while the latest State of Southeast Asia Report 2023 found that more than 68.5 percent of those who see China as most influential in the political and strategic sphere are concerned about its expanding influence. Trust seems further eroded by lack of shared information and divergent interpretations of shared issues, including on territorial issues or the urgency of acting on climate change.

Building trust is thus essential to even have a discussion on topics and to accelerate accelerated sustainable development in Asia Pacific. We propose to build trust by:

• Utilising universities  and other civil society organisations across the region as a neutral convening place for respectful discussions and interactions through research and educational exchange programs
  
• Foster joint knowledge creation to develop shared language around issues at hand. This may involve developing mutually agreed-upon perspectives on geopolitical matters such as the South China Sea, establishing definitions and data for issues like inclusive growth or emissions, and sharing instances of success and lessons to enhance learning, such as in green finance and resource governance
  
• Expanding sports and culture diplomacy to build familiarity of different cultures to a broad overseas audience.

Recommended Action 2: Foster better knowledge
and understanding of China

China has become largest trading partner, largest investor and green innovation leader for most Asia-Pacific economies. Almost all themes in GAPSO mention China—whether it is for green growth, in relation to Pacific or Southeast Asia, or to support inclusive growth through ecosystems such as Alibaba’s. Yet, the region’s understanding of China, trust in China and conflict potential with China vary widely driving ambitions to “de-couple”, “diversify”, or “deter” China, as well as to “cooperate”, “co-finance”, and “trade” with China.

Possible reasons for this conflicting view on China are the size and complexity of China (including its governance, history, economy), a (perceived) lack of transparency from China, as well as China’s rapid evolution from a manufacturing powerhouse to an innovation powerhouse which seemed unthinkable just a few years ago. Concepts of China are in consequence often outdated and drive misunderstandings of China. The only constant remains that China is here to stay and is poised to become economically and politically more powerful in the years to come.

Understanding China, engaging China while ensuring economic and political non-dependence on China are essential to foster peaceful, green and overall sustainable development for all of Asia-Pacific as well as each economy in the region. Specific actions to be taken include:

• Update and improve knowledge on China (e.g., economy, technology, finance, policy, society) regularly while keeping a balanced perspective
   
• Strengthen partnerships with Chinese partners, e.g., in research and civil society
  
  
• Build platforms for knowledge sharing with regional partners that have experiences in engaging with China to share lessons learnt (e.g., how to ask China for green finance support, how to deal with China’s political system and influence).

Recommended Action 3: Identify and focus scarce resources for
cooperation on shared issues

Asia and Pacific economies have a complex multitude of issues to deal with and priorities are often very different between the countries. At the same time, resources for cooperation are scarce: time of diplomats, policy makers and business people on the one hand, public and private money on the other hand driven by economic uncertainties and continued sovereign debt crises across many Asian economies. Nevertheless, cooperation among Asia-Pacific economies brings significant benefits to accelerate sustainable growth as it supports social and economic development, nature and climate protection and peaceful co-existence. We recommend focussing cooperation on specific topics of maximum joint interest to generate positive development and reduce the risk of negative outcomes through bilateral and minilateral (e.g., ASEAN, APEC, BRI) settings. The identified shared issues are quite clear:

• Push for climate action and biodiversity protection with the need to mobilise finance, technology and capacity for the energy and social transition. Given its geographical location, certain areas in the Asia-Pacific region are among the most vulnerable globally to the direct impacts of climate change and biodiversity loss.
   
• Drive peaceful co-existence with the urgent need to agree on a common language, common definitions and improve processes for addressing land and ocean borders (e.g., South China Sea), as well as resource use (e.g., Mekong river).
  
• Enhance democratic resilience for example by improving information through independent, accessible and trusted media as well as by ensuring fairness of election procedures.
  
• Ensure food security where Asia Pacific faces increasing food security risks (with an estimated 375 million people experiencing hunger in 2020) and increased vulnerability to climate change and biodiversity loss.

Recommended Action 4: Harness the green and digital transition to propel Asia-Pacific economies and create inclusive growth opportunities

The green and digital transition serves as the catalyst for inclusive economic growth in Asia Pacific. Already today, more individuals in the region are employed in green sectors than in traditional fossil fuel energy industries. The Asia-Pacific region possesses the potential to surpass global standards in its green transition, elevating millions of people to a healthier lifestyle (e.g., reduced pollution) while ensuring significant employment and food security across societies. Leveraging this opportunity necessitates proactive measures from both the public and private sectors, including transparent communication and equitable distribution of benefits among those adversely affected by the transition.

• Accelerate the green transition through public sector entities. State-owned enterprises that control the majority of high-emitting assets across many Asia-Pacific economies must improve governance and leadership to become drivers not barriers for green development. Private enterprises similarly require regulatory support and access to green finance to continue driving innovations in energy (e.g., green hydrogen, local green industry manufacturing jobs), food (e.g., alternative proteins), and transportation (e.g., zero-emission vehicles).
  
• Embrace digitalisation, which has already provided significant growth opportunities across the region through new means of financing (e.g., micro-finance), trade (e.g., e-commerce) and services (e.g., e-government). With a relatively young population willing to try and use new technologies, Asia-Pacific economies can leapfrog development to reach more people and lower cost creating new jobs on the way. However, governance is of greatest important to ensure fair access and protection of data.
  
• Focus on inclusive growth: Despite the region’s economic growth in recent decades, the Asia Pacific remains home to 1.7 billion people living on less than USD 2 per day. Rapid economic growth has not translated into an equitable distribution of opportunities and income. Achieving truly inclusive growth, addressing the diverse needs of people across Asia and the numerous micro-, small-, and medium-sized enterprises (MSMEs), necessitates improvements in digital technologies for finance and information sharing, essential worker training (as mentioned above), and ensuring access to finance (credit, insurance), which may include direct transfers.
  
• Foster fair, open and sustainable trade that enables MSMEs as well as multinational enterprises (MNEs) to access new markets in Asia Pacific and create jobs across the region. Several trade agreements, such as RCEP, APEC, ASEAN or PACER Plus are active in the region. Yet, trade remains often unbalanced. More work is needed to ensure access to markets while protecting local businesses, particularly with new opportunities through digitalisation and green growth.

Clearly, the devil of action resides in the details, and further research, convening, and sharing of lessons will be pivotal in nurturing Asia-Pacific leadership in sustainable development, fostering inclusive, green, and prosperous societies. Recognising the nuances among countries underscores the significance of the thorough analysis and insider perspectives provided in the six themes in this Strategic Outlook:

1. “Chasing the Asia-Pacific green transition opportunity,” authored by Christoph Nedopil, Rob Hales (both from Griffith Asia Institute), Lawrence Ang (Managing Director of Climate Smart Ventures, Singapore and the Philippines), and Fabby Tuwima (Managing Director of the Institute for Essential Services Reform, Indonesia). This article emphasises that Asia-Pacific economies stand at a critical juncture in surpassing the rest of the world in green transition. However, achieving this necessitates bold and inclusive decision-making to swiftly address five challenges and evade climate and nature loss catastrophes. These challenges include accelerating the energy transition by reforming state-owned enterprises, scaling up green financial systems, mitigating biodiversity risks, fostering climate-smart businesses, and facilitating a just green transition.

• “Leaving nothing to chance: Sustaining Pacific development beyond 2024,” an in-depth analysis of Pacific island countries’ prospects in advancing sustainable development objectives, authored by Anna Naupa (Australian National University) and Tess Newton Cain (Griffith Asia Institute). This article explores the intersection of economic prospects, climate outlook, and geopolitical dynamics with three regional priorities: deepening regional resolve, safeguarding Pacific democratic cultures, and leveraging Pacific agency. Based on their analysis, the authors offer high-level and practical recommendations to Pacific leaders and external partners to address the delicate and complex issues facing the region.

• “Engaging China in Asia for sustainable development,” written by Christoph Nedopil, Chen Gang (National University of Singapore), and Lili Mi (Griffith Asia Institute), delves into the complexities of collaborating and competing with China in the region. The article underscores the importance of engaging China for sustainability in AsiaPacific, highlighting the need for partnership and cooperation among Asian, Pacific, and Western economies to achieve sustainable development goals. The authors emphasise the necessity of solidifying mutual trust through cooperation on shared interests like climate change and green economic transition.

• “Achieving inclusive and equitable growth in Asia Pacific,” by Shawn Hunter and Dian Tjondronegoro (Griffith Asia Institute) with contributions by eight authors from the region in collaboration with the Asian Development Bank Institute (ADBI). This article examines financial inclusion, women’s economic inclusion, bridging the digital divide, food security, green financing, and artificial intelligence in the Asia-Pacific region. Despite the region’s success in poverty reduction, challenges related to inequality persist, exacerbated by the COVID-19 pandemic. The authors advocate for a multidimensional approach to addressing inequality and highlight the complexities faced by governments and development practitioners in designing and implementing effective development strategies.

• “Development outlook: Exploring the opportunities of Southeast Asia,” authored by Andrea Haefner (Griffith Asia Institute) and Sovinda Po (Center of Southeast Asia Studies, Cambodia), discusses key developments in Southeast Asia that will influence the period between 2024-2026 and beyond. The article underscores Southeast Asia’s rapidly growing and diverse economy, highlighting both traditional and non-traditional security risks, including the unresolved South China Sea dispute and transnational issues like terrorism and public health crises. Addressing these developments is crucial for achieving a sustainable, inclusive, and economically prosperous subregion.

• “Confronting labour market challenges in South Asia: An SDG perspective,” co-authored by Mohd Avi Hossain from the International Labor Organization (ILO) and Iyanatul Islam (Griffith Asia Institute), aims to address the contradictions of rapid economic growth and significant poverty in South Asia. The article examines challenges related to employment, wages, social protection, gender disparities, the green economy, and digitisation. The authors emphasise the need for policymakers to make a resolute commitment to addressing labour market challenges to realise the aspirations of the Sustainable Development Goals (SDGs).

While acknowledging the importance of other topics such as trade and artificial intelligence (AI) in the region, we contend that the issues we’ve highlighted are paramount for the strategic outlook and sustainable prosperity of Asia Pacific. Addressing these challenges necessitates unique regional approaches built on multidisciplinary research, capacity building, and collaborative action, rather than relying solely on global solutions.

Griffith Asia-Pacific Strategic Outlook provides decision-makers in policy, business, and civil society with a comprehensive analysis of megatrends and actionable pathways. It is a starting point for discussion, partnership and action. Time, however, is of essence as a failure to quickly address the region’s challenges, such as climate change, democratic resilience, or equitable and inclusive development, can swiftly precipitate a downward spiral for businesses, societies, and the planet. This is especially pertinent as social, political, and ecological tipping points become increasingly apparent, evidenced by conflicts in the South China Sea, escalating risks of climate catastrophes, disenfranchised populations seeking alternatives, and the proliferation of political blocs engaged in perilous economic and security competitions.

Yet, we believe that by working in partnership to address these identified challenges, we can unlock a sustainable development leadership trajectory for the region, fostering peaceful coexistence and inclusive prosperity for all economies in Asia Pacific.

Australia’s opportunity to unlock Asia-Pacific’s
global leadership in sustainable development

Australia is an essential economy within Asia Pacific contributing 5 percent to the region’s GDP. It is among the richest economies in the region (measured by GDP per person) with globally leading universities, health care providers, commodities firms, tourism destinations and much more. At the same time as being anchored in Asia-Pacific, Australia is considered a global North country with strong cultural, economic, and security ties to traditional Western powers, such as the USA and the EU. This position allows Australia to have a significant influence on collaborating in the region and globally.

Based on the Griffith Asia Pacific Strategic Outlook, we identify the following actions Australia can take to engage Asia-Pacific on its pathway to becoming a global leader in sustainable development:

1. Utilise its unique position to be the pillar of trust, consensus and democracy in the region.
   Australia could foster joint research in core areas of shared interest (e.g., climate, food, biodiversity, democratic resilience) through joint funding schemes with partner countries. Furthermore, Australia could utilise its universities and other venues as a neutral convening space to enable decision-making in crucial topics.
   To this end, Australia could utilise the opportunity to attract COP28 to Brisbane in close partnership with Pacific islands fostering global collaboration on climate change. It could also present itself as an ambassador for collaboration, sustainability and mutual respect through the 2032 Olympics.
   
2. Walk the talk of climate action and biodiversity protection through accelerated green transition of its economy. Currently, about 23 percent of Australia’s exports are fossil fuels and another 2.5 percent are red meats – two sectors identified as contributing most to climate change and biodiversity loss. Australia’s economy currently undermines global green growth targets, as well as its credibility as a partner for Pacific islands fighting against rising sea levels from climate change.
   
   At the same time, Australia has significant opportunities in green growth – from innovating food systems, e.g., by reducing lifetime emissions of meat production and providing alternative protein products, to using its vast land and commodity resources for the green energy transition, e.g., by building vast solar and wind farms to export electricity rather than fuels. Australia could unlock this potential offering investment opportunities for domestic and international partners linked to green growth that unlocks not only Australia’s green economy but offers great opportunities for jobs, innovation and financial returns across the region.
   
3. Expand green regional collaboration to work with Asian partners on providing capacity, technology and finance to accelerate the green transition across Asia. While Australia is engaging through bilateral means (e.g., the Department of Foreign Affairs Australia Awards program brings regional executives to learn about climate finance, sustainable growth etc to Australia), Australian public and private partners could expand tripartite or minilateral collaboration opportunities to utilise different types of knowledge, technology and finance. This cooperation could also include Chinese partners, e.g., to accelerate the green energy transition where Chinese partners lead in providing technology, but all other partners can create significant value through activities such as planning, financing, and management. It can further establish and lead a climate adaptation fund for Asia Pacific and take leadership in climate adaptation measures in the region.
   
4. Champion open, fair and sustainable trade including through trade-enabling support for MSMEs in the Pacific, Southeast Asia, and South Asia. Australia as a trusted rules-based economy can work through the Asia-Pacific Trade Facilitation Forum as well as with like-minded regional powers such as Korea and Japan to facilitate knowledge exchange on trade facilitation measures that enhance resilience of international supply chains and support sustainable economic recovery. It can provide special support and access for inclusive and green supply chains that provide opportunities for MSMEs and low-carbon and nature-positive trade.

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AUTHORS

Editors: Professor Christoph Nedopil is Driector of Griffith Asia Institute and Associate Professor Gloria Ge is Deputy Director of the Griffith Asia Institute.

Authors by chapter:

Chapter 1: Chasing the Asia-Pacific green transition opportunity
Christoph Nedopil, Rob Hales (Griffith Asia Institute), Lawrence Ang (Climate Smart Ventures), and Fabby Tuwima (Institute for Essential Services Reform).

Chapter 2: Leaving nothing to chance: Sustaining Pacific development beyond 2024
Anna Naupa (Australian National University) and Tess Newton Cain (Griffith Asia Institute).

Chapter 3: Engaging China for sustainability in Asia Pacific
Christoph Nedopil and Lili Mi (Griffith Asia Institute) and Chen Gang (National University of Singapore),

Chapter 4: Achieving inclusive and equitable growth in Asia-Pacific
Shawn Hunter and Dian Tjondronegoro (Griffith Asia Institute) Ron Bevacqua (ACCESS Advisory), Rahul Chatterjee (MicroSave Consulting), Rachel Nunn (Mandala Partners), Jie Mi, Dil Rahut, Raja Rajendra Timilsina and Yixin Yao (Asian Development Bank Institute) and Bob Trojan (Token Insights and Financial Services Insights)

Chapter 5: Development outlook: Exploring the opportunities of Southeast Asia
Andrea Haefner (Griffith Asia Institute) and Sovinda Po (Center of Southeast Asia Studies, Cambodia)

Chapter 6: Confronting labour market challenges in South Asia: An SDG perspective
Mohd Avi Hossain (International Labor Organization) and Iyanatul Islam (Griffith Asia Institute)