Bangkok--28 Feb--HSBC
China to become world’s largest trading nation by 2016
Vietnam, Bangladesh and Peru are Asia’s top emerging trade partners
Global trade will accelerate from 2014, according to the HSBC Global Connections trade forecast. Supported by an earlier resumption of economic growth within the emerging markets, HSBC has revised its forecast and expects global trade to accelerate from 2014 rather than 2015. Significantly, Asia-Pacific’s annual trade growth will consistently outperform the global average with the gap widening further over the next 15 years. The forecast also expects China to overtake the US as the world’s largest trading nation by 2016.
Simon Constantinides, HSBC's Regional Head of Global Trade & Receivables Finance, Asia-Pacific (ex Hong Kong and Macau), said: "Our research provides clear optimism for the region’s trade prospects in a somewhat challenging environment. Over the next 15 years, trade in Asia and globally is expected to grow 120% and 86%, respectively. The world’s largest businesses are continuing to broaden their supply chains across Asia-Pacific, increasingly integrating into the manufacturing process and, therefore, trade. This creates opportunities, and a need for businesses of all sizes to define their international strategy and involvement in the region’s next wave of positive trade momentum, which we forecast to begin in 2014.”
The uplift in demand for Asia-Pacific’s exports will drive global trade acceleration in 2014. Over the next five years, trade growth in China (6.61%) and Asia (6.50%) will substantially outpace global trade (3.78%). Longer-term, the region's annualised growth index (with a 2011 base) will increase by 111.92 points over the next 15 years compared to the global index, which is predicted to increase by 92.39 points.
Trading corridors
Growth in Asia’s trade activities will be driven by intra-regional and south-south trade routes with Latin America and the Middle East and North Africa, particularly in commodities and motor vehicles. Specifically, China and India will see their respective shares of global trade increase from 9.82% and 1.73% in 2011, to 12.30% and 2.25% in 2026.
China’s trade will grow at a significantly faster rate than the world average, becoming the world’s largest trading nation by 2016. According to the HSBC Global Connections trade forecast, China’s combined trade activity is forecast to expand at an annualised rate of 6.61% over the next five years to 2016, increasing to 7.41% between 2017 and 2021. As China expands its global reach, especially into South America and Africa, its substantial energy demand and higher manufacturing output will drive strong imports and exports within these sectors over the next five years with annualised growth rates of 6.59% and 6.62%, respectively.
The region’s top emerging trade partners in the next five years have been identified as Vietnam and Bangladesh in the trade of ready-made garments/textiles and rice, and Peru, Norway and Brazil in the trade of iron ore, soya and oil.
Asia-Pacific intra-regional activity will further develop as a key driver of global trade within the next five years. Amongst Asia-Pacific’s top 10 export and import partners, eight are from within the region - China, Hong Kong, Indonesia, Japan, Korea, Malaysia, Singapore and Thailand, providing further evidence of the importance of intra-regional trade. The region’s fastest growing exporters and importers over the next five years are expected to be India, Australia, China and Indonesia. India, although not the largest trader within the region, is the fastest growing, particularly in terms of exports. Australia, which largely trades in commodities such as coal and iron ore, especially to China, is also forecast to grow its exports at a significant rate in the next five years.
Sector trends
The global growth expected within the infrastructure sector will be particularly important for Asia-Pacific with its fastest emerging sectors largely in commodities (iron ore and coal) and intermediate products from Tier 2 supply chain participants, (filtering equipment and centrifuges, pumps and shafts, cranks and gears). This suggests that the region is largely producing for final assembly elsewhere and a very positive barometer to support the earlier than initial projected uptick in trade growth.
It should also be noted that a growing focus on machinery and control equipment demonstrates an ongoing shift in Asia-Pacific towards higher value production. Albeit off a small base, the printing and ancillary machinery sector, which includes machines for printing and the parts for these machines, is set to become the fastest emerging sector in Asia-Pacific as global supply chains locate production facilities in the region. The region will continue to be a dominant supplier of ready-made garments but activity will be heavily influenced by economic conditions in the West.
The report also outlines:
more detail on sector trends and emerging trade corridors
the fastest growing exporting and importing nations; and
the business opportunities associated with emerging trade sectors.
Media enquiries to Varanandha Sutthapreeda on 0-2614-4609 or Savittree Muadmuang on
0-2614-4606.