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May16, 2016

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CONSUMER DEMAND ELEVATING INTRA-ASIA TRADE INTRA-ASIA TRADE WILL increasingly benefi t from the rapid growth of consumption in Asia as a higher percentage of cargo is shipped to end markets in the region instead of to desti- nations in other parts of the world. Analysis by IHS indicates consumption in the Asia-Pacifi c as a share of world consumption will rise from 27 percent today to 39 percent by 2035. China and India's share of world consumption is set to double to 27 percent over the next 20 years. "We're going to see very rapid growth in con- sumption in Asia-Pacifi c emerging markets over the next two to three decades. This will trans- late into continued rapid growth in intra-Asia trade," Rajiv Biswas, IHS Chief Economist for the Asia-Pacifi c, told The Journal of Commerce in an interview. The link between rapid growth in consumer spending and online sales will be a primary driver of growth in cargo trans- portation and logistics services in the region, particularly in China and India, Biswas says. The Chinese e-commerce market is already the largest in the world, having overtaken the U.S., with an estimated 400 million Chinese buyers. Supporting the expansion of consumer spending will be the development of more manu- facturing in the region, with Southeast Asia set to continue enjoying growth in the lower-end manufacturing segment, including products such as garments and electronics, much of it at the expense of China. "China's rising wage costs make it diffi cult for coastal provinces to compete at the lower end of the manufacturing sector. This is an inevitable consequence of becoming a middle-income economy, and one of its down- sides." Asia's changing manufacturing patterns have already driven extraordinary growth in some Southeast Asian countries. Vietnam, for instance, has seen the annual output value of its electronics sector rise from $6.9 billion in 2011 to $45.8 billion last year. Spotlight www.joc.com THE JOURNAL OF COMMERCE 7

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