China Export Growth To Fall, Imports To Rise Economist Forecasts
SHENZHEN : Ocean carriers should expect growth of containerized shipments out of China to slow and the rate of inbound containers to accelerate as the world’s factory focuses more on domestic consumption and as its citizens satisfy their taste for foreign goods domestically, according to an IHS Markit Economist.
China’s industrial growth is slowing at the sharpest clip of any Country in Asia, in heavy and light manufacturing, but it will still be the continent’s heavyweight because of its enormous base, Brian Jackson, Senior Economist at IHS Markit in Beijing, said recently. India and Vietnam have a lot of ground to make up, considering China’s industrial base is eight and 80 times as large as Asia’s two other rapidly emerging markets, respectively. “China without a doubt is going to slow down,” Jackson added “China, even though it’s slowing, is impossible to ignore.”
The common narrative used to explain why Chinese manufacturing growth is slowing is that its wages are higher than Southeast Asian nations, especially Vietnam, he said. Although that’s a factor, Jackson said, it’s worth noting that, with the exception of Singapore, Chinese wages were higher than other countries in Southeast Asia a decade ago.
The real driver of the manufacturing shift is Vietnam’s entrance into the World Trade Organization in 2007 and its infrastructure improvements, which parallels China’s entrance into the WTO in 2001 and its own massive investment in infrastructure ranging from highways and bridges to ports.
As China’s growth in manufacturing production decelerates, Vietnam will lead the pack in growth over the next 19 years, followed by India, Indonesia, and the Association of Southeast Asian Nations, which includes Vietnam. Even so, China will continue to lead Asia in terms of trade levels, although its growth will lag that of Vietnam, India, and Indonesia, Jackson said.
“Just because China is looking at more domestic consumption, it won’t retreat from the global stage,” said Jackson.