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January 20 2020

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24 The Journal of Commerce | Januar y 20 2020 www.joc.com 2020 Asia Trade Outlook Special Report THE JAN. 15 expected signing of a partial "phase one" trade deal between China and the United States may point to an easing of the trade war that has shaken global economies, but it's going to take more than the cancellation of some tariffs to change the darkening outlook for Asian trade. Even if the US and China go forward and deescalate tensions, there's still that not-so-little matter of the tariffs not covered by the first phase of the deal, and the larger economic forces slowing demand for Asian exports and imports. China's real gross domestic product (GDP) growth rate is expected to slow to 5.7 percent this year, from 6.2 percent in 2019, according to Journal of Commerce parent company IHS Markit, paralleling a slowdown in global GDP growth from 2.6 percent to 2.5 percent. Despite a modest deceleration, IHS Markit expects Asia-Pacific economies to expand 4 percent in 2020, accounting for more than half of global growth. "The primary source of drag on Asian economies remains exports, as the US–China trade conflict drags on and global demand remains weak; however, domestic demand concerns in key economies are also undermining the region's near-term outlook," according to IHS Markit. The initial phase of the trade deal cancels 15 percent tariffs on $160 billion worth of key Chinese goods, including cell phones, laptops, shoes, and apparel, and halves tariffs on another $120 billion in goods to 7.5 percent. In exchange, Beijing agreed to buy $50 billion worth of US farm goods and tighten intel- lectual property protections. But 25 percent tariffs on another $250 billion worth of Chinese imports, in place since May, remain in effect. Transport demand growing Despite the US tariffs on Chi- nese goods and slowing economic demand, growth in Asian contain- erized exports to Europe and North America will still accelerate in the coming year, according to IHS Markit's Global Trade Atlas Forecast- ing Strategic Report. Asian exports to Europe will expand 2.6 percent in 2020, after rising 2.3 percent in 2019, while growth in Asian shipments to North America will accelerate from 1.7 percent in 2019 to 4.3 percent in 2020. Asian demand for goods and commodities from North America and Europe is also rising, with import growth from North America expected to accelerate from 1.9 percent to 2.8 percent, according to the GTA report. Similarly, Asian imports from Europe will expand by 2.6 percent this year, after a 1.9 percent uptick in 2019. That bodes well for Chinese ports looking to turn around declining volume growth in 2020. Container volume through the top 20 Chinese ports rose 3.2 year over year in the first 11 months of 2019, according to data from the transportation index provider Shanghai Shipping Exchange. Volume through those same ports rose 5.5 percent in the same 11-month period in 2018. Global manufacturing indices are giving a sense of how lukewarm demand could be for Asian goods in 2020. The JPMorgan Global Manufacturing PMI, compiled by IHS Markit based on surveys in over 30 markets, fell to 50.1 in Decem- ber from 50.3 in November. That's the second straight month with a Volume growth at top Chinese ports slows in 2019 Container throughput (in TEU*) of China's 20 busiest container ports, with year-over-year change Rank Port Market Share Jan.-Nov. YOY % Change Jan.- Nov. 2019 2017 2018 2019 2018 vs 2017 2019 vs 2018 1 Shanghai 20.0% 36,876 38,459 40,037 4.3% 4.1% 2 Ningbo-Zhoushan 12.8% 22,783 24,468 25,597 7.4% 4.6% 3 Shenzhen 11.8% 23,155 23,592 23,588 1.9% 0.0% 4 Guangzhou 10.6% 18,621 20,011 21,190 7.5% 5.9% 5 Qingdao 9.6% 16,742 17,652 19,240 5.4% 9.0% 6 Tianjin 8.1% 13,944 14,788 16,121 6.1% 9.0% 7 Xiamen 5.1% 9,487 9,802 10,187 3.3% 3.9% 8 Dalian 4.0% 9,019 9,071 8,082 0.6% -10.9% 9 Suzhou 2.9% 5,453 5,837 5,760 7.0% -1.3% 10 Yingkou 2.5% 5,711 5,910 5,050 3.5% -14.6% 11 Lianyungang 2.2% 4,348 4,392 4,439 1.0% 1.1% 12 Rizhao 2.1% 2,930 3,649 4,101 24.6% 12.4% 13 Fuzhou 1.6% 2,733 3,077 3,234 12.6% 5.1% 14 Nanjing 1.5% 2,896 2,965 3,020 2.4% 1.9% 15 Yantai 1.4% 2,504 2,755 2,845 10.0% 3.2% 16 Tangshan 1.3% 2,215 2,692 2,639 21.6% -2.0% 17 Wuhan 0.8% 1,228 1,422 1,520 15.8% 6.9% 18 Zhongshan 0.7% 1,313 1,323 1,313 0.7% -0.8% 19 Chongqing 0.5% 1,039 1,058 1,014 1.9% -4.2% 20 Zhanjiang 0.5% **795 **911 1,011 14.5% 10.9% Total 100% 183,794 193,834 199,988 5.5% 3.2% Note: *Units in '000s of TEU **Estimation volume based on annual cargo volume Source: Shanghai Shipping Exchange © 2020 IHS Markit Rising sun US–China trade deal improves Asia outlook… somewhat By JOC Staff "The primary source of drag on Asian economies remains exports, as the US–China trade conflict drags on and global demand remains weak."

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