Asia Is Integrating as the World Fragments

The paradox behind the Asian story

For much of the past decade, the debate about Asia has been framed as a shift in power: the West declines, China rises, India follows, ASEAN benefits and companies eventually move their centre of gravity eastward.

That framing is increasingly inadequate.

The more consequential development is that two apparently contradictory processes are unfolding at the same time. The international political environment is becoming more contested, while large parts of the Asian economy continue to integrate.

Global trade itself has not collapsed. UN Trade and Development estimates that goods and services trade exceeded US$35 trillion in 2025, a record, even as geopolitical tensions and trade policy reshaped where that commerce flows. In 2025, 63 per cent of Asia’s exports went to destinations within Asia. The Asian Development Bank similarly calculates that 55.9 per cent of the region’s trade was intraregional in 2024.

RCEP reinforces the same point. Its 15 economies represented 27.6 per cent of global GDP in 2024, while intra-RCEP merchandise trade reached US$5.6 trillion in 2023.

The strategic implication is not that Asia has become self-contained. It has not. Final demand, finance, technology and security ties still extend far beyond the region. Asian production networks remain deeply connected to external markets.

What is changing is the architecture.

Globalisation is becoming more regional, more redundant and more politically conditioned — without ceasing to be global.

From country risk to corridor risk

Parag Khanna has spent much of his work arguing that infrastructure and connectivity can reveal aspects of power that political maps obscure. That lens becomes more useful as corporate exposure moves from abstract geopolitical risk into physical networks.

The Strait of Hormuz offers an extreme illustration. Before the current Middle East conflict, around 20 million barrels of oil per day moved through the Strait, with roughly 80 per cent destined for Asia. The IEA describes the resulting disruption as the largest oil-supply shock in the history of the global market.

This is not simply an energy story. A port closure can change chemical input costs. A shipping disruption can affect manufacturing schedules thousands of kilometres away. A technology restriction can alter the commercial value of an otherwise efficient supplier. A maritime bottleneck can suddenly make an alternative factory geographically close but operationally distant.

The same logic applies farther east. Trillions of dollars in goods move through South China Sea routes every year, leaving individual economies and industries dependent on specific chokepoints.

The old question was: How exposed are we to China, India or Southeast Asia? The better question is: Which networks does our business depend on, where do they narrow, and how quickly can we reroute them?

That changes the nature of resilience. Inventory remains relevant. So does supplier diversification. But strategic resilience increasingly includes logistics routes, electricity systems, data infrastructure, financing channels and the authority to make decisions inside the region.

China remains central — but centrality is changing

Any account of the Asian economy that treats China as peripheral is unrealistic. Any account that treats Asia as synonymous with China is becoming equally misleading.

China’s 15th Five-Year Plan makes that tension visible. The plan places substantial emphasis on technological self-reliance, the real economy, stronger domestic demand and economic security. At the same time, Chinese authorities continue to state an intention to widen selected forms of market access and foreign investment.

That combination matters more than simplistic labels such as “decoupling”.

Keyu Jin’s The New China Playbook provides a useful intellectual counterweight to analyses that interpret China exclusively through international competition. Her argument is that the Chinese economic model has to be understood through the interaction of state institutions, entrepreneurship, household behaviour, technology and distinctive social structures.

This does not make geopolitical tension irrelevant. It makes corporate strategy harder.

A business can face tighter technology restrictions and still find its Chinese consumer market strategically important. It can diversify manufacturing into Vietnam or India while remaining dependent on Chinese intermediate inputs. It can localise R&D inside China while separating sensitive technologies elsewhere.

The relevant strategic unit is therefore no longer simply “China exposure”. It is the function being performed, the technology involved, the market being served and the network on which each depends.

Economic security is fragmenting the system selectively

Jonathan Ward approaches the same landscape from a different direction.

His work places strategic competition between the United States and China much closer to the centre of corporate decision-making. From that perspective, technology, industrial capacity, capital and supply chains are not politically neutral assets; they increasingly sit inside national-security policy.

There is substantial evidence for that shift even without accepting every conclusion drawn from it. Technology controls, investment screening and critical-mineral policies are creating new fault lines. Yet trade data simultaneously shows continued expansion, particularly in semiconductors, critical minerals, batteries and ICT products.

The useful conclusion is therefore neither “business as usual” nor universal separation.

Fragmentation is selective.

Sensitive technologies may divide more quickly than apparel. Defence-linked supply chains will behave differently from consumer services. Critical minerals may attract more state intervention than tourism or food. A single company can therefore operate simultaneously in highly globalised, regionalised and heavily securitised markets.

That is why a binary corporate policy towards China or Asia is increasingly difficult to sustain.

The other map: South-South connectivity

There is another reason the West-versus-China frame is insufficient.

Afshin Molavi’s emerge85 work was built around the 85 per cent of humanity living outside Europe and North America and the economic relationships developing among those societies themselves.

UN Trade and Development estimates that South-South trade grew by roughly 9 per cent in 2025, faster than overall world trade. East Asian economies were an important driver, but the broader significance is that trade between developing economies is becoming more material to the global system.

This does not amount to the emergence of a coherent political “Global South bloc”. Countries from India to Indonesia, Saudi Arabia to Vietnam have very different interests, alliances and economic models. Their common characteristic is precisely that they cannot safely be treated as one camp.

For international companies, that creates both difficulty and opportunity. Regional strategies can no longer be derived automatically from the priorities of a European or American headquarters. Markets once treated mainly as destinations for Western capital or extensions of Chinese manufacturing networks are increasingly becoming sources of capital, technology, demand and strategic agency themselves.

The map is becoming polycentric.

What this changes for leaders

The managerial challenge is not to predict which geopolitical narrative will ultimately prevail. It is to build an organisation that does not require one narrative to prevail.

The aim is not maximum localisation. Nor is it maximum redundancy. It is the ability to change configuration without rebuilding the company each time geopolitics moves.

That is a more demanding form of global strategy — but a more realistic one.

Four lenses, four different stage conversations

A leadership audience considering Asia may need very different intellectual provocations. The right choice depends on the decision the room needs to make.

Connectivity and regionalism

Parag Khanna

Why infrastructure, corridors and network geography increasingly determine economic resilience.↗

Economic security

Jonathan D. T. Ward

Where US–China competition affects technology, capital, industrial capacity and supply chains.↗

China from the inside out

Keyu Jin

How China’s institutional logic, entrepreneurship, households and technology shape its economic choices.↗

South-South connectivity

Afshin Molavi

How emerging markets, hub cities and new cross-regional flows are creating a more polycentric world.↗

These perspectives are complementary, not interchangeable. For another practical starting point, explore Scurati’s Geopolitics & Global Risks 3+1.

The strategic question is no longer “Asia or the West”

The phrase “Asian pivot” implies a destination. The more important change is architectural.

Asia is becoming more economically interconnected at precisely the moment when governments are imposing more strategic conditions on trade, technology and capital. The result is neither a return to frictionless globalisation nor a clean division into rival Cold War-style blocs.

It is a world of overlapping networks.

For boards, efficiency still matters. Scale still matters. Access to China still matters. So do India, ASEAN, Korea, Japan and the Gulf connections linking Asia to the Middle East and beyond.

But the scarce capability is increasingly optionality: the ability to serve markets, shift routes, protect technology and move decision-making without abandoning the advantages of integration.

That is the strategic meaning of Asia’s rise in a fragmenting world.