A deluge of negative narratives in the media about China and the US has obscured a number of positive economic developments in China. For instance, the country’s trade surplus is expected to reach a high of USD 1 trillion following a ‘coming of age’ in technological advances and a record rise in personal savings. China has adopted a strategy to lead participation in global supply chains through its emerging national champion companies in automotives, smartphones and technology platforms. More electric vehicles (EVs) were sold in China this year than in all of US, Europe and Japan combined. In India, loan books in the banking sector rose to new highs, infrastructure spending is steadily increasing and the renewable energy sector leapt ever-closer to the national goal of 500 Gw production by 2030.

These structural and secular tailwinds are playing out now and across multiple decades. We expect 2025 to set yet more records as long-term growth is fuelled by consumption, new technology and its adoption, and greater urbanisation. 
 

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In light of past economic evolution, we believe the incoming Trump administration’s hawkish rhetoric on China could act as a boon and blessing. In 2017, Trump’s initiation of a trade war and ensuing sanctions actually hastened Chinese reforms to rewire the economy. The country’s economy had been highly dependent on real-estate and infrastructure sectors – with fixed-asset investment in these sectors representing more than 40% of GDP. But the economy is now transitioning to a new model led by technology and technological self sufficiency, enabling China to escape the so-called ‘middle-income trap’ that typically plagues emerging markets (EM) and developing countries.

Across Asia, rapid economic growth and an evolving geopolitical and business landscape are raising the barriers to entry for rivals in key industries and profitable sectors. Large cap, best-in-classes businesses are developing stronger moats around their businesses every year, and the journey towards higher profitability continues. Indian equity markets crossed USD 4 trillion in market valuation in 2024 for the first time ever. 

Looking to 2025, we continue to expect strong credit markets in Asia and EM across both investment-grade and high-yield names. In Asian equities, we see continued progress, especially in areas such as banking and wealth management, household consumption, travel, medical and technology.