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Could trade deals deliver a more unified Asia?

Posted By Travis B. Kupp, Monday, April 20, 2020

Travis Kupp, a member of our Emerging Fellows program checks the possibility of a unified Asia through trade ties in his fourth blog post. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

Globalization is not on the decline, but it is evolving. Developments over the last two decades—including a financial crisis and a pandemic—have accelerated the change in economic relationships between and within all regions of the world. Trade with neighbors, in particular, have come into the spotlight as nations narrow their focus. Asia is no exception. Over the coming years, China and India will be playing an economic game with the rest of the continent that could lead to Asian unity or heightened distrust and paranoia. Deep trade integration could bring a form of economic unity to Asia that would totally eclipse Western markets.

 

The rise of the Association of Southeast Asian Nations (ASEAN) is a signal of what could be realized across the continent. The regional organization has come to develop relationships with other Asian and Pacific nations, including China and later India. As the geographic scope of partnership has increased, so has the complexity of pursuing common interests in light of imbalanced power. India’s recent decision to not participate in ASEAN’s proposed Regional Comprehensive Economic Partnership (RCEP) is indicative of these limits. India is an attractive market for exports but has concerns that the terms of RCEP could result in a flood of imports, especially from China, harming its domestic industry and agriculture. While India’s economy continues to experience strong growth relative to the rest of the world, it is not yet capable of competing directly with its advanced Eastern neighbor in the trade arena.

 

In one possible future, India’s growth outpaces China and it makes the necessary structural changes and infrastructure investments to dramatically increase its exports. These developments occur while the encircling Belt and Road Initiative (BRI) struggles through a decelerated Chinese economy and underwhelming returns on its massive foreign investments. India takes advantage of these trends to strengthen its trade relationships in both Southeast and Central Asia, creating a new balance of geo-economic power in the region. China reluctantly recognizes this new state of the world, scales back its assertiveness to avoid military conflict, and becomes a more amenable partner in a broader trade union across the continent.

 

In another future, India’s infrastructure remains inadequate to take advantage of its demographic and economic growth lead. The BRI successfully draws Central Asian nations closer into China’s orbit of influence, heightening tensions with interested neighbors Russia and India. China uses RCEP as a lever to increase pressure on Japan, Vietnam, and others with respect to its territorial disputes. Nations across Asia face a difficult choice whether to cave to Chinese pressure or face the economic consequences of their trade sanctions. The rest of world seeks to better balance its flow of trade with China while taking a careful approach to relationships in the rest of Asia, mostly seeking less risky deals closer to home. What unity exists in this future Asia is predicated on whether you are under Chinese economic influence or not.

 

Trade integration promotes peace, but it does not erase borders nor national interests. While disputes about exactly where some Asian nations begin and end may not be settled anytime soon, successful strengthening of trade agreements could lead to unprecedented regional integration and stability. While unanticipated events in the coming decades could accelerate the balance of power in favor of China or India, what is certain is that trade relationships with these two nations will be a determining factor for Asia’s future. The way these regional economic alliances develop will either create a newfound unity or an uneasiness felt around the globe.

 

© Travis Kupp 2020

Tags:  Asia  China  trade 

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