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Report: China’s share of global trade growth to plunge in next 5 years

DHL, NYU Stern School report highlights increasing prominence of trading blocs, emerging markets

China’s share of global trade growth will decline by half over the next five years as businesses diversify their international production and distribution networks and the country focuses more attention on building its domestic supply base, according to a report released Thursday.

The report, developed by New York University’s Stern School of Business and German transport and logistics giant Deutsche Post DHL Group, forecasts that China’s share of global trade growth–imports and exports–will drop to 13% from 2022 to 2026. That is down from 26% between 2016 and 2021, according to the report. All figures are calculated on an annualized basis.

The economic and geopolitical fallout from the COVID-19 pandemic will play a minor role in driving China’s trade activity through mid-decade, Steven A. Altman, the report’s lead author and senior research scholar and director of the DHL Initiative on Globalization at the Stern School, said in an email. 

A projected decline in China’s GDP growth will be more of a contributing factor, Altman said. A slower pace of a nation’s GDP growth almost always correlates with slowing trade volumes, he said.

In addition, China will experience mean reversion in export growth over the next five years after greatly outperforming during 2020 and 2021, Altman said.

China will remain the world’s trade leader among the individual nations analyzed in the 272-page report. It will account for 3.4% of all export volumes through 2026 and 4.1% of all import volumes. The report analyzed trade activity in 173 nations.

The first-ever report of its kind, dubbed the “DHL Trade Growth Atlas,” paints a picture of a broadening landscape for trade activity as businesses seek out new markets for supply and consumption. For example, the 10 countries making up the Association of Southeast Asian Nations (ASEAN) trade bloc will hold the top spots for import and export growth through 2026, according to the report. The ASEAN bloc will account for 12.2% of total trade volumes over the next five years, the report said. 

Sub-Saharan Africa and the Middle East and North African regions will show by far the biggest leaps over the two cycles, the report found. Sub-Saharan Africa will account for 4.4% of all export volumes over the next five years and 4.9% of all import volumes. That compares with a 0.1% decline in imports and a 1.1% rise in imports between 2016 and 2021.

The Middle East and North African region will handle 3.5% of all exports and 4.4% of all imports over the next five years, the report forecasts. That compares with 0.8% and 0.9% growth, respectively, from 2016 to 2021.

Still, 55% of all trade over the next five years will occur in developed countries, according to the report. Europe will generate 35% of all trade growth, about equal to East Asia and the Pacific regions combined, the report forecast.

Trade flows have remained resilient despite the economic shock of the pandemic. Goods trade at the end of last year was 10% above pre-pandemic levels, the report said. Trade growth is expected to modestly outpace GDP growth over the next five years, led by what is expected to be strong cross-border e-commerce growth.

The report pulled data from secondary sources such as the International Monetary Fund as well as primary sources such as prior macroeconomic forecasts published by DHL. Altman said he hopes to publish similar reports annually or as frequently as twice a year.

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Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.