Asia is looking at how it can rebuild some of its economic strength as it moves forward from the pain of coronavirus, and boosting local intra-regional trade is gaining ground as a solution. 

The Asian economy has taken a battering during the coronavirus pandemic and growth trajectories have been rapidly revised down in 2020. On top of this, the US–China trade conflict continues and shows little sign of a return to levels of co-operation seen under US president Barack Obama’s administration, even if the November elections result in a change of president. 

A solution is to jumpstart trade again within the region. Some of China’s neighbours have already benefited from Chinese companies moving their manufacturing beyond their borders to get around US tariffs, while still being able to continue exporting to the US by replacing the ‘Made in China’ tag for a more acceptable ‘Made in Vietnam’, for example. However, the US tariffs also have an impact beyond China, as companies are no longer allowed to export US technology to China for final manufacturing processes, leading many firms to look for alternatives.  

China is also keeping up with its plans for the Belt and Road Initiative, although in a somewhat retracted form. Gone are the days of the large Chinese loans, which later raised questions among international commentators on the repayment terms. The policy now looks to be focusing on projects and countries with a tangible benefit to Chinese trade, with the central Asian countries along China’s western border among those benefiting from support for infrastructure projects. 

Some countries have been looking far beyond the region in search of security. Japan has signed a trade deal with the UK for contained co-operation in the post-Brexit environment, although this, in reality, goes little beyond what had already been in place when the UK was part of the EU. The main aim of the new deal is to protect the long-term Japanese investment into the UK’s automobile manufacturing sector. India, meanwhile, has taken a protectionist approach, encouraging manufacturing leaving China to come to India instead. 

The overall solution may come from the creation of more intra-regional trade deals, to encourage greater levels of interaction between near neighbours and their growing consumer economies. India has recently signed a deal with Japan and Australia to ensure the health of their reciprocal supply chains. But all of this will be tempered by how successfully these countries can tackle the ever-present spectre of coronavirus. 

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