UK exports to China are forecast to rise to meet demand from the emerging middle classes in the world’s second largest economy, according to a new report on international trade.
The report from HSBC and Oxford Economics predicts that world trade growth will significantly outpace global GDP growth in the next three years.
The sovereign debt crisis engulfing Europe damaged UK export performance this year, but the report said the long-term outlook for international trade is positive.
It forecasts that UK exports to Asia, excluding Japan, will rise by nearly 11 per cent a year during 2013-15 and by 9 per cent a year during 2016-2020.
James Emmett, global head of trade at HSBC, said the acceleration in export growth “reflects the continued and growing appetite the high value, high-end range of goods made in Britain... from fast-moving consumer goods to specialist products in sectors such as technology and pharmaceutical”.
He added: “This shift creates export opportunities for businesses right across the developed world as countries such as China, which were previously known as centres for production and manufacturing, become equally important as a market for Western exports.”
But although the share of UK exports destined for China is expected to grow, the rise will not be enough to elevate the republic from fifth position in the UK league table of trading partners, said the bank.
Mark Robson, regional director at UK Trade & Investment, said: “China’s imports are growing rapidly and we need to make sure we have our increasing share of it.
“The Germans, the French and the Italians will be there and of course the Americans as well. We need to make sure that we retain and expand our percentage of imports that come from us. There are plenty of people in China who are very wealthy and demand our products and services. We are in a good position to provide them.
“Companies should be thinking where the opportunities are. They should also be thinking about the threat of Chinese businesses coming here. They are very sophisticated.”
Mr Robson added: “The Olympics has been a fantastic boost for us because it really put the UK on the map and made Britain look cool.”
At a global level, the report predicts a dual-speed trade rebound with emerging markets driving growth to 2015 with the developed world rejoining in 2016 as trade resurges.
The report estimates global GDP growth of 4 per cent to 2015, lower than the 6 per cent increase forecast for global trade over the same period.
It expects UK exports to the eurozone – the country’s main trading partner – to rebound as the region stabilises.
The report said UK exports to Europe will rise by 5 per cent a year from 2015-20. Further afield, the report said India is expected to be the most dynamic trade route from 2013-20.
Strong growth is also forecast for UK exports to the Middle East and North Africa.
Steve Box, European head of trade at HSBC, said: “The latest forecast shows a positive long-term outlook for UK businesses.
“Trading internationally continues to be critical not only for the British companies who want to remain competitive in the future, but it is also critical for the UK economy.
“It remains clear that world trade will continue to underpin business growth in both the near and longer-term, with trade growth set to outpace GDP growth to 2030.”
The report said the USA will overtake Germany to become the UK’s most important market for exports by 2030.
Britain’s trade deficit narrowed more than expected in September. Friday’s figures showed exports to the European Union in the third quarter were 2.5 per cent lower than a year earlier, while exports to elsewhere in the world were 13.3 per cent higher.
Nick Baird, chief executive of UKTI, said: “Foreign trade has been a defining feature of Britain’s economic history and will be a firm foundation of our future.”
He said the UKTI’s Export Week campaign – launched yesterday – will offer thousands of companies the opportunity to learn more about how to succeed overseas.
The Leeds City Region Local Enterprise Partnership is hosting an export event tomorrow to promote opportunities in emerging markets.
The event promises a day of one-to-one meetings with 50 UKTI staff from 50 locations worldwide.