Opinion In the US-China Cold War, South Asia is ground zero

From military bases to trade deals, the US pivots back to South Asia to limit China’s growing strategic clout

The region, due to its strategic location and geopolitical significance, is once again becoming a zone of multi-vector competition, reminiscent of the dynamics seen during the original Cold War.

Sanjay K Bhardwaj

October 16, 2025 11:31 AM IST First published on: Oct 16, 2025 at 11:31 AM IST

South Asia is increasingly becoming a new arena for Cold War-style geopolitics as tensions between the United States and China escalate. In this phase of what some term “lopsided multipolarity” or emerging “bipolarity”, the US is experiencing a relative decline, while China is rapidly rising. Both powers are employing varied strategies in pursuit of global hegemony. While the US seeks to defend the existing international order, China is aggressively working to displace the US from its position as the singular global hegemon. This global contest is now significantly focused on South Asia.

The region, due to its strategic location and geopolitical significance, is once again becoming a zone of multi-vector competition, reminiscent of the dynamics seen during the original Cold War. Over the past few decades, Beijing, leveraging its capital reserves and state-owned enterprises (SOEs), has made substantial inroads into South Asia through its Belt and Road Initiative (BRI). Most countries in the region — except India and Bhutan — have joined the initiative, incentivised by its geoeconomic offerings. China provides development aid in the form of soft loans and grants, serving both economic and strategic interests. It has built roads, railways, ports, pipelines and power infrastructure to boost connectivity and access to markets.

In Pakistan, over $62 billion has been invested under the China-Pakistan Economic Corridor (CPEC), including the development of Gwadar Port. On the Bay of Bengal side, China has supported projects such as the Karnaphuli Tunnel, Padma Bridge, Payra Deep Sea Port, Chittagong shipping facilities, proposed upgrades to Sylhet Airport, dredging of the Teesta River and the creation of industrial parks like the “China Industrial Economic Zone” in Bangladesh. Further, the China-Myanmar Economic Corridor and development of the Kyaukpyu Port extend China’s influence into Myanmar.

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In smaller nations in South Asia, China has financed infrastructure projects such as the Pokhara International Airport in Nepal; the Mattala International Airport, Colombo Port City, Colombo International Container Terminal and Hambantota Port in Sri Lanka, as well as various bridges and infrastructure investments in the Maldives. This growing Chinese footprint has not gone unnoticed by Washington, which has since developed a counter-strategy.

US response — reasserting strategic influence in South Asia

The US withdrawal from Afghanistan created a strategic vacuum that China has sought to fill. Recognising this shift, the US has moved to reassert its presence in South Asia, both strategically and politically. Washington has prioritised its Indo-Pacific strategy, relying heavily on India to check China’s influence in the region. Agreements such as the US-India Civil Nuclear Deal and the Next Steps in Strategic Partnership (NSSP) were shaped by America’s recognition of India as an emerging power. However, regional complexities and India’s non-aligned stance have often complicated this partnership.

To counter China more directly, the US has adopted a three-pronged strategy.

Firstly, the US is enhancing its maritime and military footprint in South Asia. Pakistan has reportedly offered the Pasni Port — just 70 miles from the Chinese-operated Gwadar Port and 100 miles from the Pakistan-Iran border — for US use. Additionally, the first secretive shipment of rare earth minerals from Pakistan to the US signals a shifting alignment. This move recalls earlier Cold War dynamics, such as Prime Minister Liaqat Ali Khan’s 1950 outreach to the US, which led to military alliances like SEATO and CENTO.

In Afghanistan, the Trump administration considered regaining control of Bagram Air Base, a strategic asset about 50 kilometres from Kabul — though the proposal was widely opposed by regional powers. In the Bay of Bengal, the US has long sought a military presence. The Status of Forces Agreement (SOFA), proposed in 1998 and later formalised as HANA, underpins this ambition. The US has also allegedly sought to build an airbase on Bangladesh’s Saint Martin’s Island to contain China’s growing presence. Additionally, the US maintains a joint military base at Diego Garcia in the Indian Ocean and is now pursuing new strategic facilities at Pasni and potentially under a “Quad Ports for the Future” initiative.

Secondly, although hard evidence is unavailable, patterns suggest US involvement — direct or indirect — in regime changes in South Asia that align with its strategic interests, including that of Pakistan’s Prime Minister Imran Khan in April 2022 and Sheikh Hasina in Bangladesh in August 2024.

Thirdly, it is offering economic alternatives. To counter the perception that China is the region’s sole economic benefactor, the US is increasing its financial footprint:

In 2023, Washington announced a $553 million deep-water shipping terminal project in Sri Lanka.
In 2024, it pledged $202 million to Bangladesh for economic stabilisation.
In 2025, the US reached agreements with Pakistan to lower tariffs and committed $500 million in critical mineral investments.

The US is also promoting alternative financing mechanisms through agencies such as the Millennium Challenge Corporation, the US Development Finance Corporation and the Blue Dot Network, offering developing countries a counterweight to Chinese capital.

India’s strategic imperative

Amid this intensifying US-China rivalry in South Asia, India must avoid being trapped in great-power competition. Instead, it should pursue a balanced, multi-aligned foreign policy to preserve its strategic autonomy. India’s interests lie in promoting liberal-democratic values and upholding a rules-based international order — both to maintain its regional influence and to shape the emerging world order.

The writer is professor, School of International Studies, JNU