“The search for resources and export markets is a key driver of Asia’s economic growth and expansion. Rich in natural resources, with a large population of youthful, increasingly well-educated workforce and a growing middle class – this is the era of Asia and the emerging markets of Latin America and the MiddleEast,†he added.
Three trade triangles
The hypothesis of DHL’s research is that trade within three distinct, highgrowth trade triangles are expected to shape the global economy.
These triangles include: Intra-Asia, Middle East-Africa-Asia and Latin America-Asia. Within these three triangles, China’s imports of raw materials and exports of various manufactured goods such as industrial machinery, textiles and telecommunications and office equipment will increasingly dominate trade volumes, according to Ude.
“There’s no doubt Asia and the emerging markets will shape the direction and future for economic and commercial expansion,†he said. “If we look at the global logistics market in 1999, Asia’s share of it stood at 34 per cent, or US$15.57 billion. By 2008 this figure had grown to $339 billion, making up 46 per cent – or nearly half of the worldwide market,†he added. DHL identified core trade lanes driving growth in each of the three high growth triangles of trade.
Within Intra-Asia trade, DHL expects China to be responsible for some 40 per cent of trade, led by the import of raw materials into China and the exports of textiles, industrial machinery, telecommunications and office equipment and foodstuff.
Of these, China’s trade with Korea, Taiwan, Japan, Hong Kong and Thailand will continue to dominate trade volumes. Also rapidly growing are Chinese exports to India, Indonesia and Malaysia.
While at present, a significant part of the trade within Middle East-Africa- Asia growth triangle is contributed by oil and gas exports growth on these lanes is largely stagnant, DHL noted.
Trade growth within the triangle will come from China’s trade with South Africa, Saudi Arabia and the United Arab Emirates through China’s imports of raw materials – crude oil, iron and other minerals – and exports of textiles, apparel, machinery and metal products.
India’s contribution to growth is also sizable where, similarly, raw materials are key imports (crude oil from the Middle East and coal from South Africa) while exports are various foodstuffs and textiles destined for the Middle East.
Between 2008–2018, Latin America- Asia trade is also expected to grow 4.2 per cent, more than double world trade growth at two per cent, registering the fastest growth of the three areas.
Key trade lane growth between China and Latin America is expected at 5 per cent during the same period aided by imports of metals, ores, animal feed and oil seeds mainly to China, but also increasingly to India, Indonesia and Thailand. China’s exports will consist of manufactured goods – electronics, textiles, machinery.
Converging trends
The rise of the emerging economies, particularly Asia and its role in shaping the global economy is the result of several converging trends according to Ude.
Globalisation has led to an increasing share of the global economy by the emerging economies, particularly Asia. The contribution to the global GDP by Asian countries, excluding Japan, has increased from 9 per cent in 1990, to 15 per cent in 2008 and the trend is expected to continue. It is projected that the share of Asian economies in the global GDP will reach 20 per cent by 2015.
While labor costs in Asia will increase, labour arbitrage opportunities are expected to persist due to gains in productivity. This will result in the trend towards offshoring and global sourcing to remain over the next 10 years.
As the population in developed economies is getting older, a growing proportion of the labor force and new consumers will come from the emerging economies, said DHL. Nearly 58 per cent of the world’s population of working age is in Asia, a figure expected to remain stable until 2028.
Of this, 15 per cent are in the Middle East and Africa and 14 per cent in the Americas. The Middle East is expected to account for 19 per cent by 2028, while the Americas will remain stable. By contrast, just 9 per cent of the population of working age is in Europe today, and by 2028, this figure will only be 6 per cent.
At the same time, a larger number of people from emerging economies will drive consumption. By 2015 more than 550 million people in emerging economies will have an annual income higher than US$4,000 per year (GDP per capita at purchasing power parity). Translated to a household level, this implies a household income of $12,000 to 16,000 – enough to fuel demand for items such as cars, consumer durables, tourism and higher education.
China will contribute significantly to this rising middle class – 240 million people, or 45 per cent of the total, will live in China. Other Asian emerging economies will contribute further 15 per cent, bringing Asia’s share of the emerging consumer market to 60 per cent.
Asia will also soon emerge as a knowledge economy as a rising percentage of the population will have university degrees. In 2008, for example, 65 per cent of university graduates came from Asia. Additionally, Asian countries will spend more on R&D, according to DHL.
China’s rapid growth is driving the region’s hunger for resources and its approach towards trade – investments in exchange for mining rights will drivetrade growth, between Asia and Africa.
