A New Pakistan and China-led South Asia Regional Bloc?
Yirong Han | 30 July 2025
Summary
Pakistan and China are engaged in advanced discussions to form a new regional bloc, potentially offering an alternative to the South Asian Association for Regional Cooperation (SAARC).
This initiative aims to recalibrate South Asia’s geopolitical landscape by fostering integration and enhancing connectivity, challenging traditional alignments.
The formation of this bloc will highly likely significantly shift power dynamics in South Asia, posing challenges to India’s influence and raising economic, political, and strategic questions for the region.
On 19 June 2025, senior diplomats from Pakistan, China, and Bangladesh met in Kunming, China, to discuss the formation of a new regional bloc. The trilateral effort stems from a perceived necessity for fresh frameworks for regional integration and enhanced trade and connectivity - directly challenging the long-stalled South Asian Association for Regional Cooperation (SAARC). SAARC, established in 1985, is a regional intergovernmental organisation designed to promote economic and social cooperation among its South Asian member states, however its ambitions for deeper integration have consistently been undermined by geopolitical tensions.
SAARC’s decade-long summit interruption, largely due to adversarial India-Pakistan relations, has created a vacuum, signifying a critical point for regional cooperation. While the initiative intends to extend invitations to SAARC members, India’s participation is considered unlikely due to divergent interests, suggesting a future two-tiered system of regional cooperation. The proposed bloc, rooted in “like-minded countries”, implies a more cohesive but potentially less inclusive platform, and is expected to intensify broader geopolitical competition in South Asia.
Implications
The active pursuit of a new regional bloc by Pakistan and China directly challenges SAARC. This new grouping suggests a future where regional cooperation is defined not solely by geographical proximity, but by strategic alignment and shared developmental philosophies.
However, the proposed bloc faces complexities beyond a binary division. While it aims to include other SAARC members, India’s likely exclusion due to divergent interests could create a two-tiered system of regional cooperation. Smaller South Asian nations, such as Bangladesh, Nepal, and the Maldives, are demonstrating a multi-vector approach. Nepal, for instance, has reportedly rejected joining a bloc without India, while the Maldives has engaged with China yet also allowed India to deploy defence assets. This highlights a strategic caution against merely ‘escaping one master only to serve another’, complicating the formation of rigid regional spheres of influence.
For Pakistan, this bloc presents a crucial platform to enhance its diplomatic standing and counter the perception of regional isolation, particularly given its exclusion from other regional bodies, such as the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). BIMSTEC brings together five South Asian (Bangladesh, Bhutan, India, Nepal, and Sri Lanka) and two from South-East Asia (Myanmar and Thailand) for economic and technical co-operation, and is notably seen by India as a key initiative to counterweight China’s Belt and Road Initiative (BRI), highlighting strategic competition over regional connectivity. For China, it provides an avenue to deepen strategic ties and expand its footprint in South Asia. This recalibration is poised to intensify strategic competition between China and India through increased economic aid, infrastructure investment, and diplomatic overtures. The risk of heightened regional tensions and proxy rivalries is a significant concern. Ultimately, a China and Pakistan-led bloc, if successful, could become a mechanism for Beijing’s long-term economic dominance, posing a risk of increased dependency for smaller participating nations.
The new bloc’s explicit focus on regional integration and connectivity, potentially leveraging initiatives like the China-Pakistan Economic Corridor (CPEC), aims to re-engineer South Asia’s economic channels. This infrastructure development could bypass or diminish India’s traditional centrality, risking economic marginalisation for non-aligned states. Conversely, member states might face increased economic dependency on Chinese-led investments and standards. The “like-minded countries” approach suggests a shared developmental philosophy that could lead to uneven development and greater disparities within South Asia. While member states might benefit from Chinese standards, other nations could struggle to integrate with these new networks, exacerbating existing economic divides.
Abdullah Shakoor/pixabay.com
Forecast
Short-term (Now - 3 months)
South Asian countries will likely reassess diplomatic stances as they evaluate the new bloc, leading to potential realignment in bilateral and multilateral relationships with a high impact on the regional diplomatic framework.
Discussions on the new bloc are likely to trigger heightened scrutiny over SAARC’s relevance, compelling member nations to reassess their commitment, with medium impact, potentially leading to its further stagnation or cessation.
Medium-term (3-12 months)
The bloc’s operationalisation has a realistic possibility to herald a fundamental shift in South Asia’s power architecture, creating more openly defined alliances and destabilising longstanding regional balances with high impact.
As the bloc asserts its economic agenda, shifts in infrastructure and trade routes will highly likely decrease India’s sway over regional economic flows, posing high developmental challenges for non-aligned states, forcing economic recalibration.
Long-term (>1 year)
If successful, the bloc has a realistic possibility of realigning South Asia’s geopolitical and economic landscape, likely reducing India’s historical hegemonic influence and encouraging multipolarity, thus reshaping regional strategies.
