When headline growth isn’t the full story

Insight: China confirmed that it achieved 5% GDP growth for 2025, but the composition of growth reveals a more cautionary story: a record USD 1.19 trillion export surplus offset weak domestic demand, underscoring Beijing’s reliance on exports rather than household-led recovery amid a prolonged property downturn. 

Impact: While Beijing again met its headline growth target and has signaled an aim of “around 5%” this year, analysts warn the model remains “lopsided,” with exports continuing to mask soft consumption and structural strains at home. Officials have acknowledged rising external pressures and long-standing challenges, suggesting limited appetite for large-scale stimulus. As policymakers prepare for the next Five-Year Plan, the focus is likely to shift toward stabilizing services and consumption rather than reigniting investment, with ongoing spillovers for regional trade and competitive dynamics across the continent.

Japan’s 40-year government bond yield hit a record high, underscoring how mounting investor unease over fiscal expansion ahead of February’s snap election is pushing even the world’s lowest-yield market into uncharted territory.

Insight: To ring in the new year, the Chinese government introduced a 13% sales tax on condoms and contraceptive drugs — a jarring reversal from the one-child policy era. The move comes as the country’s birth rate plummeted to 5.6 births per thousand people in 2025, the lowest since the People's Republic was founded in 1949, with total births falling to just 7.9 million. Despite rolling out aggressive incentives last year, including tax-free daycare, cash subsidies, and extended parental leave, China's population still contracted by 3.4 million.

Impact: China’s declining birth rate isn’t happening in isolation; it’s a snapshot of East Asia’s full-blown fertility crisis. Preliminary data suggests Japan’s births in 2025 will hit a record low, extending a decade-long demographic decline, while South Korea’s birth rate remains the lowest in the world at 0.75. For an economy that has been historically driven by consumption, the implications of a shrinking population for China are vast, and its effect will ripple everywhere from consumer spending to labor costs and innovation capacity. Behind these trends also lies a fundamental shift in values: Younger generations across the region are prioritizing individual autonomy, career flexibility, and personal fulfillment over traditional family structures, a cultural transformation that no fiscal incentive can easily reverse.

Insight: Asia’s obsession with spicy food has reached a fever pitch, reshaping restaurant menus and consumer habits across the region. In Singapore's Bugis neighborhood, at least 15 extra-spicy Sichuan hotpot restaurants have displaced Cantonese eateries in recent years, while one-third of China's 1.4 million restaurants now serve the fiery cuisines of Hunan or Sichuan provinces, regions that only account for 10% of the mainland population.  

Impact: The spice craze is a classic case of neuroscience meeting commerce — where sensory stimulation and novelty are being systematically monetized. Capsaicin triggers pain receptors that flood the brain with endorphins and dopamine, creating a feedback loop where consumers chase ever-higher heat levels for the same rush. For companies, this addictive quality translates directly to repeat purchases and premium pricing power. McDonald's chili oil sundaes went viral in China, proving legacy brands can reinvent classics with minimal investment. South Korea's Samyang Foods, on the other hand, is struggling to meet demand for its Buldak ramen, turning what was once a niche product into a billion-dollar export business fueled by social media challenges. For F&B companies navigating Asia's changing consumer landscape, the simplest path to growth might run straight through one’s pain receptors.

As AI adoption accelerates unevenly across Asia, the gap between early movers and laggards is widening. Economies such as Singapore and South Korea are amongst those leading global usage, where adoption has been driven by policy clarity, digital infrastructure, and public sector deployment. Against this backdrop, FGS Global has launched a dedicated AI Advisory practice to help organizations harness AI for communications and decision-making while managing fast-evolving reputational and security risks. The move reflects growing demand across the continent for strategic guidance that balances AI opportunity with governance, resilience and trust. 

Learn more about our new AI Advisory practice here.