skip to log on skip to main content
VoiceOver users please use the tab key when navigating expanded menus
Article related to:


Asia’s shifting capital opportunity

Chief Economist, ANZ

2023-10-18 00:00

China is changing. For so long, the world’s second-largest economy was a vacuum cleaner for capital across Asia Pacific. Now, slowing growth in China is creating significant opportunities elsewhere.

A study released in September showed US and European greenfield investment into China fell below $US20 billion in 2022, down from around $US120 billion in 2018. For businesses with long-held views about China and its place in the Asian economy, a reassessment of the landscape is required – and quickly.

Similar thinking applies for other Asian economies. In recent decades, the regions that succeeded in attracting capital were those that pursued a clear strategy.

Singapore targeted services and pharmaceuticals with a very clear strategy. Vietnam took a very deliberate approach to foreign-direct investment into manufacturing. Those that opened the door to foreign business without a clear strategy may have found China too hard to compete with.

But China is a different economic prospect today. It's no longer an automatic magnet for foreign direct investment, portfolio capital, credit investors or expats. The shift looks structural and reflects a range of long-lived reasons.

Not fade away

Of course, China isn’t going anywhere. It’s still half the region in terms of gross domestic product. Many economies across Asia Pacific owe much of their prosperity to China and an element of that will not change.

Even as it changes, China will continue to play a critical role in global trade.  It is an $US18 trillion economy and a fifth of the world’s GDP. It's more than three times larger than Japan, and still more than four times larger than India, though India has plenty of room to grow.

Businesses, and even economies, need to engage with China to succeed - but in a way that's suited to the times. And the times have changed.

When China joined the World Trade Organisation in 2001, many organisations were quick to recognise something had fundamentally shifted and world trading patterns would never be the same. The movement of people would be affected for decades to come.

At that time, having an aspirational mindset and working through the challenges of the Chinese market was required.

Engagement with China is still critical for success - but such engagement needs to tilt to recognise what has changed.


There is a risk some organisations hold a dated view of China. Inertia plays a role. Part of that is natural, given the substantial investment that remains in, and will remain in, the country.

But China is changing. Exports alone can’t support ongoing growth, and China is transitioning to domestic demand. It's not a policy choice, or a bug in the system. It's a feature of economic development for a very large economy. That transition is already underway.

Recognition of that change needs to occur at the same pace. As foreign-direct investment looks more broadly than China, the opportunity for other economies, and businesses, across Asia is there for the taking.

Richard Yetsenga is Chief Economist at ANZ

This story is an edited version of comments made at Asia Briefing LIVE 2023 in October

Asia’s shifting capital opportunity
Richard Yetsenga
Chief Economist, ANZ
Sign up
Icon of ANZ logo coming out of an envelope

Receive insights direct to your inbox


Related articles

  • USA

    US rates high for longer: Martin

    Alexandra Cooper Contributor, ANZ Institutional Insights

    Inflation data suggest FOMC won’t be cutting anytime soon, expert says on podcast.

    2023-10-13 00:00
  • Australia

    Soft landing in sight for Australia

    Adam Boyton Head of Australian Economics, ANZ Research

    Growth in the second half of 2023 won’t match that seen in the first, but a modest pick-up is on the cards in the medium term.

    2023-09-28 00:00

This publication is published by Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (“ANZBGL”) in Australia. This publication is intended as thought-leadership material. It is not published with the intention of providing any direct or indirect recommendations relating to any financial product, asset class or trading strategy. The information in this publication is not intended to influence any person to make a decision in relation to a financial product or class of financial products. It is general in nature and does not take account of the circumstances of any individual or class of individuals. Nothing in this publication constitutes a recommendation, solicitation or offer by ANZBGL or its branches or subsidiaries (collectively “ANZ”) to you to acquire a product or service, or an offer by ANZ to provide you with other products or services. All information contained in this publication is based on information available at the time of publication. While this publication has been prepared in good faith, no representation, warranty, assurance or undertaking is or will be made, and no responsibility or liability is or will be accepted by ANZ in relation to the accuracy or completeness of this publication or the use of information contained in this publication. ANZ does not provide any financial, investment, legal or taxation advice in connection with this publication.