China Trade to Increase over the Long Run, Despite Recent Slowdown

China’s exports are expected to grow by 12 percent annually from 2013 to 2015, mainly driven by expanding trade with emerging markets, HSBC said in a report.

The report predicts India and Vietnam will be China’s fastest growing export markets in he next three years, with exports to India surging by 20 percent annually and exports to Vietnam growing by 18 percent annually. Exports to the Middle East and North Africa, China’s new export destinations, are expected to grow by 14 percent each year.

China’s trade growth has been sluggish from the outset of 2012 due to the European debt crisis and the United States’ economic downturn, but these trends look set to fade. Recent trade data has shown signs of a stabilizing market. The country will maintain strong trade momentum in the long run backed by increased trade with emerging markets.

China’s efforts to balance trade and expand imports will benefit developed markets such as the US and the EU. Imports from the US will grow 10.4 percent each year in the next three years, and imports from the UK will expand 9.9 percent annually in the next three years and 11.1percent annually from 2016 to 2020.

China customs’ data showed exports climbed in October by 11.6 percent from a year earlier, the fastest pace since May and beating expectations for a 9 percent rise. Shipments to the United States jumped to a four-month high of 9 percent from 5.5 percent in September. Orders to the European Union, China’s biggest export market, also saw a smaller contraction of 8.1 percent, compared to 10.7 percent a month earlier.

All these offset slower exports to Japan, which grew 1.1 percent year on year in October compared to 2.2 percent in September.

Exports are still a crucial component of the Chinese economy, despite the state’s efforts to rebalance the economy towards domestic consumption which have struggled to gain traction. The sector generated about 31 percent of gross domestic product (GDP) in 2011, World Bank data show, and supported an estimated 200 million jobs. Any weakness in exports will therefore weigh on China’s growth, which is on track to grow at 7.5 percent in 2012, thereby slowing the government’s attempts to rebalance the economy.

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