OPINION: Fifteen years ago, in the wake of the financial crisis, we believed we were on the cusp of an Asian century. The US-led West had shot itself in the foot through a combination of greed and leverage.

'Meanwhile, the Chinese authorities were spending, investing and exporting their way out of a global depression. And the rapid expansion of the country’s middle class was fuelling a consumer-led domestic growth story.

Anyone who backed those themes in their investment portfolio has had a rough ride in the decade and a half since then. One hundred pounds (NZ$231) invested in the MSCI China index is worth £125 (NZ$289) today. The same amount directed towards the seemingly burned-out US market has grown to nearly £600 (NZ$1,387).

The shift in the balance of global economic power was put on hold, eclipsed by the rise of America’s tech giants. But maybe the rise of China was simply hiding in plain sight.

Fast forward to today, and China is back in fashion again. The complacent view that the country was “uninvestable” now looks silly. This time around, the buzz is not about newly urbanised Chinese families buying their first fridge and television.

The case for China in 2026 and beyond is altogether more interesting. As Jefferies, an investment bank, put it recently, it is “the biggest underappreciated story of our time: China’s tech prowess”.

A chart comparing America’s stock market dominance over the past 15 years with China’s stagnation is almost identical to one I saw this week showing the two countries’ patent applications over the same period.

With one key difference. When it comes to patents, the six-fold rise since 2010 belongs not to the US but to China. It is America that has flat-lined. When it comes to innovation, China is way out in front.

Between 2007 and 2023, according to the OECD, China’s research and development spending grew at a compound rate of nearly 12% a year, versus 3.7% in America and 2.6% in the EU.

The speed of China’s ascendancy in a wide range of technologies is breathtaking. Australia’s Strategic Policy Institute, a think tank, believes China has overtaken America in cutting-edge research in 57 out of 64 technology areas it tracks.

In defence-related areas such as advanced aircraft engines, hypersonic weapons, undersea wireless communication, and sonar, the share of global research is twice that of rivals in the US, UK, Australia, Japan and South Korea.

As Jensen Huang, Nvidia’s chief executive, said recently: “The applications in China are advancing incredibly fast. This is an area that I’m quite concerned about.”

Elon Musk, who foolishly laughed off the threat from China’s BYD a dozen or so years ago, now says: “China’s going to be great at anything it puts its mind to.”

Jamie Dimon, JPMorgan Chase’s boss, says: “China is ... doing a lot of things well. But what I really worry about is us. Can we get our own act together?”

Back in April, Trump’s tariff announcements seemed to cloud the outlook for what we thought was an export-reliant Asia. The panic was short-lived and the recovery in US markets since the spring has been matched by the bounce-back in Chinese and other Asian markets.

Front-loading of exports and policy support cushioned the shock. The baton was then picked up by an appetite for diversification away from the US, a weaker dollar and the surprising domestic strength of Asian economies...