Despite the turbulence of recent days in global stock markets, a newly-released analysis predicts that trade from China and Southeast Asia to North America and Europe will boom over the next five years.
Despite the turbulence of recent days in global stock markets, a newly-released analysis predicts that trade from China and Southeast Asia to North America and Europe will boom over the next five years.
The forecast, released by analysis and business information firm IHS Inc, suggests that China’s trade will continue to increase by more than 5% per year between 2015 and 2020. This positive medium-term trade growth comes despite more recent setbacks caused by the marked economic slowdown in China and weaker growth among other emerging markets (EMs) in the current and near-term.
“These increases will not be the double-digit rises seen before the 2008 global economic crisis,” said Krispen Atkinson, principal analyst at IHS Maritime & Trade.
“However, an increase of over 30% in the next five years underscores China’s intent to remain a new trade hub-and spoke lynchpin for the rest of the economic world, cementing the Maritime Silk Road Initiative via China and Asia within the EM universe.”
HIS notes that one new trend is the move towards larger container ships to streamline the supply chain. The four alliances that dominate east-west trade are pushing the trend towards containerships capable of carrying 20,000 boxes (20 foot equivalent units), in their quest to reduce unit costs with ever more efficient vessels.
Current container ships hold around 13,000 boxes, so the new super-containers are capable of transporting over 50% more cargo. Their push has meant further capacity has become available in the trade. “China may be the major powerhouse in the region, but Southeast Asia is making significant headway,” said Atkinson.
Vietnam’s exports are estimated to increase by 44% by 2020. IHS forecasts a 44% rise in trade between Vietnam and North America and 43% growth in trade between Vietnam and Europe in the same period. “In terms of actual cargo, the figures are still low when compared with China’s, but these are still huge jumps for these economies,” Atkinson said.
“Vietnam, India and many of the South Asian economies stand to benefit from recent energy and commodity price falls as net importers of these goods,” said Jan Randolph director of sovereign risk analysis at IHS. “They have significant industries and services sectors of their own that benefit from cheaper inputs and have currencies that are not coupled to a strengthening US dollar.”
Trade routes from China to Africa are expected to see a marked increase over the next five years, with the highest growth expected from the East African to China route, incorporating Malawi, Mozambique, Zambia, and Zimbabwe.
“Trade between East Africa and China is expected to increase by 91% by 2020,” Atkinson said. “It’s all around manufactured goods. East Africa is becoming a new hub for the Chinese.”