US President Donald Trump’s landmark visit to China comes as the US-Iran war disrupts global energy supplies, fuels economic uncertainty and adds fresh strain to Washington-Beijing ties. In the latest instalment of a series examining how rivalry, interdependence and geopolitical crises are reshaping the relationship between the two powers, we explore the massive upswing in capital expenditures across Asia that is driving a broad shift in economic power.

When US President Donald Trump made his state visit to Beijing this week, he brought one of the wealthiest business delegations ever to call from the United States.

But while the 17 executives joined Trump in search of further opportunity in Asia’s largest market, any capital they would contribute for a deal would end up recirculating around China and the continent at large, inadvertently providing more fuel for a massive reorientation of economic activity already in progress.

From advanced computer hardware to renewable energy, companies around East Asia are reacting to fallout from US-involved trade disputes, conflict in the Middle East and a world AI race by raising capital expenditures in a range of relevant industries to the highest levels in 20 years – and more on the way.

Morgan Stanley last month declared a coming “super cycle” in capital expenditures around Asia – one not seen since the region’s industrialisation spurt from 2003 to 2007.

In an April 27 research note, the New York-based financial services firm documented a “structural rise” in spending on defence, AI and AI-related infrastructure and energy including energy transitions. It said the rise was creating jobs and letting wages increase, in turn sustaining the cycle.

Xu Tianchen, a senior economist at the Economist Intelligence Unit, said China’s deeply integrated industrial supply chain positioned it particularly well for a new industrial supercycle, with the country capable of producing everything from transformers and solar panels to semiconductors.