For advisers seeking to navigate the complexity of Asian markets, Peiqian Liu, Asia economist at Fidelity International, offers a clear-eyed view of the seismic demographic, technological and geopolitical trends shaping the region. Liu’s analysis goes well beyond short-term macro calls, instead identifying the social and structural undercurrents that will define how capital is allocated in the coming decades. Advisers who understand these themes will be better placed to position client portfolios for durable, long-term exposure to Asian growth.
Liu starts with a demographic truth that underpins much of Asia’s economic outlook: populations in East Asia are aging rapidly. “We’ve seen Japan and Korea go through it; now China is entering the demographic cliff,” she says. The implications are enormous. China’s working-age population is shrinking while new births decline, setting a structural cap on domestic demand and threatening long-term potential growth.
Rather than delay the reckoning, Liu argues that Beijing is facing this challenge head-on. “China proactively addressed the risks by curbing its property boom,” she says. That has left a painful short-term growth gap, but Liu sees it as a necessary policy choice to avoid an unsustainable debt spiral. More interestingly for investors, she notes that the pivot has set China on a course of rebalancing away from real estate and towards innovation-driven sectors like digitalisation, automation and AI.
This shift ties into another key theme Liu identifies, the role of technology in addressing demographic constraints. “China is now installing half of the world’s industrial robots,” she says, pointing to the emergence of “dark factories” that function without human intervention. These capital-intensive solutions are part of a new growth paradigm that hinges less on labour supply and more on productivity gains, especially in manufacturing.
Yet China’s current moment is not just a story of transformation, but also of macroeconomic recalibration. “For a long time, the ‘credit impulse’ was the only data point you needed to understand China’s economic cycles,” Liu reflects. (A term coined by economist Michael Biggs of Deutsche Bank in 2008, the credit impulse is the change in new credit issued in a nation in a period as a percentage of its GDP.) That model broke down since around 2019, she says, and today the Chinese economy is in a bifurcated state: on one hand, local governments struggle with revenue shortfalls as land sales dry up; on the other, central government is stepping in with significant bond issuance to stabilise growth.
Importantly for advisers, Liu stresses that this centralisation is likely a temporary measure. President Xi’s outreach to the private sector earlier this year signals a coming pivot back to entrepreneurial dynamism. “It was a significant moment,” she says. “The message was clear: the state took over to stabilise, but now it’s time to hand the baton back.” For equity investors, this shift could mean renewed momentum in sectors like clean energy, biotech and AI, domains that fall outside the traditional property-led growth model.
Advisers will also need to rethink globalisation assumptions. Liu says we are now in a “fragmented” trade environment. The original US-China tariffs under Trump have evolved into a broader web of barriers affecting the entire region. “Trade is like water,” she explains. “It finds a way, but it flows through new, smaller streams now.” That fragmentation creates volatility, but also opportunity, particularly for countries like Vietnam, Malaysia and Indonesia, which are picking up supply-chain slack from China.
Singapore, Liu notes, is particularly well-positioned to benefit. With its hybrid East-West identity and strong institutional base, the city-state can serve as a regional anchor in this new trade architecture. “Singapore is taking a proactive role in driving collaboration,” Liu says, citing growing investment and M&A activity across ASEAN markets.
From an asset allocation perspective, these shifts imply that a blanket ‘Asia ex-Japan’ strategy is no longer sufficient. Instead, advisers should adopt a selective, bottom-up approach that identifies national and sectoral strengths. For instance, Liu observes that tech exporters continue to thrive, even under high tariffs, whereas non-tech exporters are struggling with weaker demand and rising costs.
In practical terms, this means active management is back in favour. Liu suggests investors now need to consider not just traditional metrics like GDP growth, but also each country’s place in the evolving supply-chain matrix. “Each economy holds its own competitive advantage,” she says, noting that even amid global slowdown fears, structural demand in areas like semiconductors, ‘clean energy’ inputs and AI infrastructure remains robust.
Perhaps the most compelling part of Liu’s view is her ability to zoom-out. She likens the current landscape to a jiu-jitsu match, where weight distribution, connection points and leverage matter more than brute force. In this metaphor, the US-China trade dynamic becomes less about domination and more about adaptation. “It’s not a takedown, it’s a repositioning,” she says, suggesting advisers need to think in terms of networked resilience rather than national primacy.
Ultimately, what emerges from Liu’s analysis is a picture of Asia that is less monolithic and more layered, less dependent on old growth models and more reliant on innovation and collaboration. For advisers, the key takeaway is clear: asset allocation in Asia must now be guided by a deeper understanding of regional interdependence, technological evolution and demographic transformation. These are not just abstract forces, they are investable realities.
As fragmentation becomes the new foundation of the global economy, Asia offers a test case for adaptive investing. It is a region where policy, population and production intersect with real consequences for capital. The challenge for advisers is no longer finding growth in Asia, but discerning what type of growth to back. Liu’s framework provides a compelling roadmap for that task.