To tweak a running joke “the war between US and China is over and the winner is Asia” Actually, even with the Biden administration, as evinced by the recent tensions in the South China Sea, the tussle is far from over, yet the punchline reveals a crucial development: With the US retreating from global commitments and China’s state-driven model sprawling its sway, the time is exigent for a new narrative, provided by the promise of Asia ex china, to level the world order.
For far too long, the economies of this region have been hedging their positions, trying to manoeuvre the two superpowers, but a trust deficit and scepticism about China’s debt-trap diplomacy along with a fickle US turning inwards, necessitate that the region creates a strategically significant economic position of its own. The crucial component for this will be the integration of South Asia.
There is an ongoing churn in South Asia and the pandemic provides a propitious window for South Asian countries to abandon traditional concerns and take collaborative action. The crucible of crisis holds promise for unprecedented actions: the European Union and ASEAN stand testament to such regional engagement, serving as a template for South Asia.
Despite a shared cultural history, there exists sparse cross-subregional economic integration through trade or investment in South Asia. Its integration with itself as well as with the South East remains dismal. South Asia’s intra-regional trade is the lowest globally, constituting only 5% of the region’s total trade. The current integration is just one-third of its potential with an annual estimated gap of $23 billion.
Moreover, emerging scarred from the pandemic, with many South Asian countries taking a relatively severe economic hit, the region needs to position itself for recovery on a sustainable and accelerated growth trajectory.
