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Rising geopolitical tensions, shifting alliances and changes in foreign investment flows could gradually reshape the global trade landscape, said Xeneta, a leading Oslo-based benchmarking and market analysis platform.
Ocean and air freight rate benchmarks and intelligence platforms point to the rise of “friend outsourcing” and evidence of changing freight volumes between major markets to paint a picture of what could be a “new world order”. China, the US, Vietnam and Russia appear to be some of the key players in the slowly unfolding conspiracy.
fight for safety
“There is a renewed focus on supply chain security in the wake of ongoing factors such as the US-China trade war, the global pandemic and the invasion of Ukraine,” said Emily Stausbøll, market analyst at Xeneta. awareness, which is only exacerbated by growing geopolitical uncertainty.
“So we’re seeing more signs of friendship outsourcing, where investment, manufacturing and facilities are being moved to countries that are considered ‘friendly’ — basically sharing the same values or geopolitical outlook. It’s a gradual process, but We can already see some major changes in the flows of container shipping and a real sea shift in foreign investment flows. The impact should not be underestimated.”
challenging leadership
Xeneta’s analysis revealed some notable developments. In the US, for example, containerized imports from the Far East have grown by 26% over the past five years. However, of the 12 major economies in the region, China and Singapore recorded the lowest export growth, at “only” 7% (Hong Kong was the only economy whose export volumes did not increase). This is in stark contrast to “friendlier” Vietnam, which saw a 156% growth rate in containerized trade with the US between 2017 and 2022.
A similar trend emerged with regard to the share of import volumes. In 2022, 56% of all containerized imports from the Far East to the US will come from China. The apparent strength of this figure belied the fact that this share was actually down 10 percentage points from 2017. Vietnam, on the other hand, nearly doubled its share, from 6% in 2017 to 11% in 2022.
war foothold
Export data for the first few months of 2023 support the changing impression of the trading world, Stausbøll noted.
She explained: “China’s exports to the United States fell significantly in March, with trade volume down $3.6 billion from a year ago. However, despite the sharp decline, China’s total exports in March still achieved an impressive 15% Profound year-over-year growth. How? Russia is the obvious answer.
“Russia’s exports to China rose by $5.2 billion year-on-year, enough to make up for the shortfall to the US, as waves of international sanctions curtailed their trade possibilities. Exports to South Asian countries also posted strong year-on-year growth this month.”
According to Xeneta, the shift is far from over.
foreign influence
“If we look at the IMF’s analysis of foreign direct investment (FDI) flows, the changes are very clear – in short, we see camaraderie at work,” Stausbøll said.
The International Monetary Fund found that investment in China by foreign companies fell to the lowest level in nearly 20 years in the second half of 2022. It fell 73% year-on-year to $42.5 billion. To sum up, from the second half of 2020 to the first half of 2022, the average foreign investment will be US$160 billion every six months.
In contrast, FDI in Vietnam will increase by 61.2% year-on-year in the first three months of 2023, of which the number of new foreign investment projects will increase by 62.1%. The processing and manufacturing industry attracted the most investment, accounting for about 75% of the total investment.
Fortune-telling
Stausbøll comments: “It takes time to build new production sites and invest in port infrastructure, such as we have seen in Vietnam, Cambodia and Singapore, so the impact of investing today will not be fully appreciated until tomorrow. This means we are now The shifting trade patterns seen may just be the beginning of a larger adjustment.”
She concludes: “Looking ahead, the evidence suggests that we will see more trade and investment decisions based on geopolitics rather than availability or price. How this will play out, and the pace of change, will depend on a number of uncertainties— — especially escalating tensions around Taiwan. Europe has so far maintained its share of imports from China, key leaders have taken a more conciliatory approach than the US, but another major geopolitical “event” could change This is the case. The only sure thing is change, and the support of friends is bound to influence the way it is changed.” — trade arab news agency
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