OREANDA-NEWS. March 04, 2013. World trade is shifting towards the production of higher-value goods as emerging economies grow wealthier, according to the latest HSBC Global Connections report.

The trade shift will be led by China where exports will be driven by industrial machinery and information and communications technology (ICT). These two higher-value added sectors are expected to account for around half of the forecast growth in China's total exports in the period 2013-20.

At the same time, the contribution of lower-value sectors such as textiles will decline as rising wage cost erodes China's competitive edge. This will create opportunities for smaller, faster-growing Asian countries such as Vietnam and Bangladesh to increase their production of low-cost goods such as clothing. Export growth from these low-wage economies is forecast to average 10-12 per cent a year in the decade to 2030.

The report predicts Asia will lead global export growth with India, Vietnam and China all expected to post double-digit annual growth throughout the period 2013-20. 'South-South' trade between emerging markets will increase in importance.

Turkey will also see rapid growth in exports, thanks to higher demand for iron and steel from emerging markets that need metals to support major infrastructure projects. Clothing and textiles as a percentage of Turkey's total exports will decline as the country turns its focus to higher value-added industries.

In contrast to the emerging markets, exports from the advanced economies are expected to accelerate more gradually as demand recovers slowly in the industrialised world.

Faced with competition from lower-cost producers in the emerging markets, exports from the developed economies will be increasingly focused in high-technology sectors, where they can still command a competitive advantage.

For example, the UK is managing to remain competitive in chemicals and pharmaceuticals by innovation, improving quality and driving up efficiency. Like the UK the US will continue to trade in industrial machinery, but increasingly at the higher-end of the sector.

The Saudi Arabian economy is expected to gradually diversify its export base, which is driven by oil, into other areas such as plastics and chemicals.

James Emmett, HSBC's Global Head of Trade and Receivables Finance, said: "Emerging markets are developing at a phenomenal pace and are set to reshape world trade patterns over the next 20 years. By expanding their operations into new, higher-value sectors, they are driving more developed nations to specialise and diversify to compete."