Diversification can help cushion possible tariff impacts

China's foreign trade continued to demonstrate resilience last year.

Demands from emerging markets continue to rise, with the Association of Southeast Asian Nations and Latin America being the key regions giving China's exports a boost. From January to November 2024, driven by the deepening cooperation under the Belt and Road Initiative, China's exports to ASEAN and Latin America recorded year-on-year growth rates of 12 percent and 13 percent respectively.

Exports of automobiles and auto parts achieved year-on-year growth of 15.4 percent and 5.8 percent, respectively, in 2024. Additionally, the value of China's cumulative exports of integrated circuits increased by 16.7 percent year-on-year. Overseas restocking demand saw exports of home appliances grow by 12.8 percent year-on-year in 2024.

In 2025, the potential risk of increased US tariffs may pose some challenge to China's exports but China's trade has diversified into other markets, which might help offset the impact. The proportion of exports to developed economies such as the United States and the European Union has declined since US-China trade frictions began in 2018; but the share to emerging markets has steadily increased. In 2024, the US and EU accounted for 14.7 percent and 14.4 percent of China's exports, down 2.1 and 2.7 percentage points, respectively, from the end of 2019. Meanwhile, ASEAN and Latin America accounted for 16.4 percent and 7.7 percent of China's exports, up 2 and 1.7 percentage points, respectively, from the end of 2019.

China's share in the US import structure has been dipping since 2018, while its position in the EU import structure has remained stable. The exports share to ASEAN, the EU, and Mexico has increased by varying degrees. China's position in the EU import structure has remained stable, with its share hovering around 21 percent since 2022. It would thus be feasible for Chinese enterprises to mitigate the possible impact of US tariffs through overseas expansion and reexporting.

21ST CENTURY BUSINESS HERALD