Future of China & the maritime industry
Martin Stopford
President,
Clarkson Research
China at a Turning Point
The Trade Development Cycle &
the One Belt One Road concept
The Chairman’s Forum, Looking Ahead From the City of London
Cass Business School, London 15th September 2015
Martin Stopford, Clarkson Research
1
Figure 1: World seaborne imports in 2014
12
China accounted
for 41% of import
growth since 2003
Billion tonnes of
cargo
China
10
8
6
.
2
0
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
Martin Stopford, Clarkson
Research
4
2
Figure 2: China’s seaborne imports and exports
seaborne trade Mt
2000
Sea imports
Sea Exports
2015 Imports forecast
Line 5
1500
1000
500
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
0
Figure 3: China’s Industrial production growth
Post 1997 Asia
Crisis Recession
Average14%pa
Source: industrial data from various sources
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
35%
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
1992/3 Bubble
Figure 4: Typical “trade development cycle” peaking
• The trade development cycle
(TDC) describes the import
growth path of transitional
economies
• It has three stages:– Stage 1: modest imports
funded by primary exports
– Stage 2: As the economy speeds
up imports of raw materials grow
rapidly
– Stage 3: the volume of imports
grows slowly
• China seems to have reached
turning point 2
Value added
growth
Turning point
China ?
Resource
intensive
growth
economy
undeveloped
1
2
For the shipping
industry the key
issue is the
timing of the two
turning points
Source: Maritime Economics martin Stopford (1997)
Stage 1
Early Industrial
Stage 2
Transitional
Stage 3
Mature
Trade development cycles 1950-2015: EUROPE
1,500
1,000
500
1
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
0
1950
• There have been four
waves of regional
growth:1. Europe lead the
way in the 1950s
Imports M tonnes
2,500
Europe
2,000
Trade development cycles 1950-2015: JAPAN
Europe
Japan
2,000
1,500
1,000
500
1
2
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
0
1950
• There have been four
waves of regional
growth:1. Europe lead the
way in 1950s,
2. Followed by Japan
in 1960
Imports M tonnes
2,500
Trade development cycles 1950-2015: SE ASIA
Europe
Japan
SE Asia
2,000
1,500
1,000
500
1
2
3
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
0
1950
• There have been four
waves of regional
growth:1. Europe lead the
way in 1950s,
2. Followed by Japan
in 1960
3. Asia in about 1975
Imports M tonnes
2,500
Figure 5: Trade development cycles 1950-2015:
Imports M tonnes
CHINA
2,500
Europe
Japan
SE Asia
China
2,000
1,500
1,000
500
1
2
3
4
2015
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
0
1950
• There have been four
waves of regional
growth:1. Europe lead the
way in 1950s,
2. Followed by Japan
in 1960
3. Asia in about 1975
4. Chinese trade
started to grow
rapidly in 1994
• The growth pattern was
a slow start followed by
rapid growth
Figure 5: Trade development cycles 1950-2015
Japan
SE Asia
China
2,000
1,500
1,000
500
1
2
3
4
2015
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
0
1950
• There have been four
waves of regional
growth:1. Europe lead the
way in 1950s,
2. Followed by Japan
in 1960
3. Asia in about 1975
4. Chinese trade
started to grow
rapidly in 1994
• The growth pattern was
a slow start followed by
rapid growth
Imports M tonnes
2,500
Europe
Future Trade Scenario: Challenging
6.42
Japan
Average 3.5 tonnes/capita
1 billion OECD import 3.5
billion tonnes of cargo
3.55
Europe
1.65
N. America
Average 1.0 tonne/capita
6 billion Non-OECD countries
import 6.4 billion tonnes of cargo
1.5
China
0.90
ROW
World Average 1.4 tonne/capita
1.37
World 2015
0
1
2
3
4
5
6
7
8
9
Sea imports per person a year in 2015
Martin Stopford, Clarkson Research
10 11 12
11
Figure 6: China in the world maritime economy
18%
Population
15%
GDP (market)
PPP measure
of world GDP
17%
GDP (PPP)
20%
Sea Trade
41% of trade growth 2003-2014
Trade Growth
Share of world
shipbuilding
10%
World Fleet
33% Deliveries CGT
Deliveries
35%
30%
25%
20%
15%
10%
5%
38% Shipyard orderbook CGT
Orderbook
0%
• China is now 1820% of population,
GDP and sea
imports
• Big impact on trade
growth
• Big shipbuilding
share
Exchange rate
measure of
world GDP
China’s share of world total 2014/5
Figure 7 China’s import growth by commodity 1999-2014
0
Million tonnes increase in trade 1999-2014
200
400
600
800
1,000
Iron ore dominates
trade growth
Iron Ore
Crude
Minor Bulk
Coal
Metals
Containerisable
Grains
Manufactures
Chemical
877
243
235
231
96
80
51
35
17
Figure 9: Steel consumption per capita 2013
Kg per cap 0
Japan
EU (27)
USA
China
M East
CIS
India
S Am
Africa
100
200
300
400
500
600
516
274
300
515
213
227
58
105
42
Source: World Steel Association “World Steel in Figures 2014”
One Belt, One Road – President Xi’s vision
Moscow
Istanbul
Khoigas
Almaty
Bishkek Urumqi
Samarkand
Dushanbe
Tehran
Gwadar
Central Asia
Gwadar
Gwadar
Figure 10: China Silk Road ECONOMIC Belt
• The economic belt will lop
thousands of kilometres of
the traditional sea routes
for Chinese exports
• It is a vital transport route
for imports of oil, gas and
other natural resources.
Source Gavekal/Dragonomics
Figure 11: China’s Silk Road MARITIME Belt
• Improved connectivity
between Asia and Europe,
creating valuable new
trade routes and boosting
regional growth:
• Measures to improve
performance include
– upgrade ports;
– improved logistics; lower
trade barriers;
– financial integration
Source Gavekal/Dragonomics
Eurasia Land Bridge
photos: Tom Miller
Better connectivity will enable its underdeveloped border regions to become viable
trade zones
Conclusions
• China is moving from the transitional stage of development
to maturity
• There is surplus capacity in shipbuilding, steel and
infrastructure development companies.
• The Silk Road Economic and Maritime Belt might open up
Central Asia & maritime Asia.
• Shipping will benefit from better port and inland
infrastructure within Asia, and economic development,
making improved transport services possible.
Figure 12: The Westline – 5000 years of maritime trade
8. England 1735:
merchant fleet
overtakes Dutch
shipping
12.
Hanseatic League
1950-70 Japan:
7. Dutch 6. 1400
13.
1990s
China
1970s
S Korea 10.
AD:
trade
miracle economy
1650 AD:
emerges as major emerges as
between
N.
W.
leads shipping
dominate
power
industrial power
Europe
and
the
sea trade
Baltic sea
9. 1880-1950:
growing power of
N. America as
global trade hub
5. Venice 1000:
crossroads for
East /West
trade
4. Rome100 BC:
dominates west
Mediterranean
3. Greece 300BC
trade centres
Corinth & Athens
2. Phoenicians:
1. Gulf:
trade from Lebanon 3000 BC trade between
1500-300 BC
India and Babylon
Sea trade scenarios 2015-2065
Sea Trade
Scenario 1 4 tonnes per capita in 2065
2065
2055
2045
2035
2025
2015
2005
1995
1985
1975
1945
1935
1925
1915
1905
1895
1885
1875
1865
1865-1935
3.5% pa growth
Liner & tramp shipping
(pushing out sailing ships)
1965
1950-2014
4.8% pa growth
Bulk, specialized,
container shipping
1955
45
40
35
30
25
20
15
10
5
0
2015-2065
That works out at 1.1%2.8% pa growth
Scenario 2: 1.7 tonnes per capita in 2065
Figure 8: China’s steel production & iron ore imports
Steel forecast
Iron Ore Imports
Steel Production
Iron ore imports forecast
1953
1955
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
1000
900
800
700
600
500
400
300
200
100
0