IHS: China’s Trade to Keep Up the Momentum in Next 5 Years

 Trade from China and Southeast Asia to North America and Europe is expected to boom in the next five years, according to new analysis released today by IHS Inc., a US-based industry analyst.

The World Trade Service of IHS Maritime & Trade forecasts that China’s trade will continue to increase by more than 5 percent 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 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 percent 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 emerging market universe. “

“China may be the major powerhouse in the region, but Southeast Asia is making significant headway,” Atkinson said commenting on the Southeast Asia-North America trade boom.

Vietnam’s exports are estimated to increase by 44 percent by 2020. IHS forecasts a 44 percent increase in trade between Vietnam and North America and a 43 percent increase in trade between Vietnam and Europe in the next five years.

“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.

Trade between these two regions is made up of manufactured goods, such as home appliances or mechanical hardware.

“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.” 

East Africa-China trade boom

Further more, the analysis indicated that trade routes from China to Africa are expected to see a marked increase over the next five years, up to 91 percent by 2020. The highest growth expected to be seen from the East African to China route, incorporating Malawi, Mozambique, Zambia, and Zimbabwe.

“It’s all around manufactured goods. East Africa is becoming a new hub for the Chinese,” Atkinson said.

According to Natznet Tesfay, head of sub-Saharan Africa analysis at IHS County Risk, Chinese investments in enhancing regional interconnectivity will enable it to take advantage of comparatively lower operational costs and to onshore manufacturing activity in East Africa.