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Will Asia’s exports ever recover?

STR | AFP | Getty Images

Asia's export growth has stalled since a post-financial crisis recovery, faced with a combination of weak global demand and structural changes, HSBC said.

"Asia's trade engine has lost its spark," HSBC said in a note Tuesday, noting that the region's shipment growth has slowed from an average of 20 percent over 2004-2007 to just 9.6 percent from 2011-2013.

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While the bank expects some of the slowdown to reverse, especially as U.S. demand appears to be stabilizing, "the bad news is that developed market demand, while on the mend, is unlikely to deliver the same boost to Asian exports as it did in the past," HSBC said, adding that developed market demand is likely to remain structurally lower.

Both the Euro zone and Japan are grappling with high government debt and aging demographics, while in the U.S., growth was previously propped up by unsustainable household credit, it noted.

But it's not just developed markets weighing on emerging Asia exports, HSBC said, noting that the U.S., Europe and Japan together account for only 32 percent of the region's exports, with much of the past's shipment growth coming from other emerging markets, most especially China.

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"With the Chinese economy nearly eight times as large as it was at the turn of the century, the region's export performance has become more sensitive to Mainland growth," HSBC said.

In the third quarter, China's economic growth slowed to 7.3 percent from the year-earlier quarter, its slowest pace in more than five years, during the depths of the financial crisis.

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Beyond just lower demand, emerging Asia faces a structural change as it loses competitive advantages, HSBC said.

"Over the past two decades, Asia's supply chains have been designed to reap the benefits from cheap Chinese labor. The era of cheap China and, more broadly, of cheap Asia, is drawing to a close, however," it said, calling the shift away from labor-intensive, assembly manufacturing the biggest structural force shaping the region's trade.

It cited the huge jump in manufacturing wages in the region over the last 10 years, especially in China where they have surged by 370 percent since the country entered the World Trade Organization, or WTO, in 2001. In addition, the supply of "excess workers" able to shift into manufacturing jobs has dwindled, especially as the population is aging, it noted.

To be sure, HSBC still expects Asia's trade growth to keep outperforming the rest of the world, with the subdued short-term picture likely to give way to better long-term prospects.

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Over the next decade, services exports are likely to rise, intra-regional trade in finished goods is likely to rise, spurred on by rising incomes, and India may step up as an "export powerhouse," taking over the labor-intensive manufacturing that has become too expensive in China, HSBC said.

—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1