{"text":[[{"start":5.55,"text":"The writer is chief Asia economist at Morgan Stanley"}],[{"start":9,"text":"The market narrative in Asia has been narrowly focused on the impact of AI on economies and companies. But AI is just one aspect of a much broader shift under way across the region."}],[{"start":21.55,"text":"Asia is entering an industrial supercycle fuelled by a sustained rise in capital expenditure. This is not just a cyclical rebound tied to strength in tech exports but a capex cycle powered by a structural uptrend in public- and private-sector spending."}],[{"start":36.5,"text":"While AI and AI-related infrastructure are key drivers, the transition to renewable power, investment in energy security more broadly and rises in defence-related spending will also contribute to a pick-up in industrial capex."}],[{"start":50.15,"text":"We expect capital expenditure in these sectors to increase at a 16 per cent compound annual growth rate in dollar terms over the next five years. This will lift Asia’s overall capex growth to 7 per cent over that span, around three times the pace over 2023-25. We forecast that Asia’s capex will reach an annual run rate of $16tn in 2030, up from $11tn today."}],[{"start":74.8,"text":"The strength of the capex and industrial supercycle is already evident in the data. A broad range of industrial-linked indicators sit at multiyear highs and in most cases are nearing or exceeding 2017-18 levels — the last time the global economy staged a synchronous recovery."}],[{"start":94.35,"text":"Capital goods imports, our preferred proxy for the capex cycle, have already surpassed the 2017-18 peaks. Asia’s purchasing managers’ index rose to a four-and-a-half-year high in February on a broad base, while industrial production growth approached a four-year high. Importantly, non-tech exports, which remained soft for much of 2025, have moved meaningfully higher since the fourth quarter last year. Export data in April and early May remain robust, indicating that the strength of the industrial cycle is outweighing the energy shock."}],[{"start":128.95,"text":"In AI and AI-related infrastructure, Asia’s corporate sector must accelerate spending to catch up with the US. At the same time, Asia remains a critical link in the global AI supply chain. As US hyperscalers pursue their rapid build-out, Asian chip manufacturers are collectively accelerating capex outlays to meet surging demand."}],[{"start":151.5,"text":"In spending on the green power transition and energy security, China has been the leader, but the rest of Asia was catching up even before the recent geopolitical tensions. More energy is needed to power AI, while the transition to renewables requires continued investment. The surge in the oil price has made energy security a priority for policy."}],[{"start":170.45,"text":"As for defence, before the onset of geopolitical tensions, China’s budgeted increase for defence spending will exceed GDP growth; India has raised budgetary allocations for defence capex by 18 per cent for this year, while policymakers in Japan, Korea and Taiwan are increasing defence budgets from a combined 1.7 per cent of GDP currently to a target of nearly 3 per cent of GDP over the medium term. Geopolitical tensions would have only strengthened their commitment."}],[{"start":199,"text":"The rise in spending in these three areas will catalyse a broader capex and industrial cycle as knock-on effects feed through the entire supply chain. For example, demand for the machinery and commodities that underpin these drivers will grow, leading related sectors such as capital goods to raise capex."}],[{"start":217.9,"text":"Asia stands to reap the benefits of a rise in capex spending twice over. First, the increase in Asia’s capex will fuel its industrial cycle. Second, Asia is the world’s production powerhouse, accounting for almost 50 per cent of the global industrial sector’s value added. The structural forces we have identified for Asia are at work in nearly every economy around the world and global capex growth is estimated to outpace overall GDP growth. Asia’s industrial cycle will benefit from feeding this global capex boom."}],[{"start":251.2,"text":"Moreover, as the rise in capex supports strong job creation and wage growth, it will lift consumption growth, which broadens the expansion and sustains the capex cycle."}],[{"start":261.65,"text":"While this upswing will lift all economies in Asia, China, Japan, Korea and Taiwan will benefit the most, given the higher share of the industrial sector in their GDP as well as the larger percentage of AI-enabling, energy-transition-related, defence products and capital goods in their export basket. India will also benefit from the industrial cycle pick-up, together with a domestic capex boost from easy fiscal and monetary policies. Australia and Indonesia stand to gain as commodity exporters, with the raw materials price index at a four-year high. The multiyear industrial and capex cycle already under way in Asia is shaping up to be the best since the 2000s. "}],[{"start":310.4,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1779181704_4640.mp3"}