China used its trade juggernaut to withstand US tariffs. Can it keep its edge?

By CNN Newsource

Published November 14, 2025 4:37 PM

By Simone McCarthy, Joyce Jiang, CNN

Beijing (CNN) — As US duties on Chinese imports spun higher and higher earlier this year, Derek Wang braced for major disruption.

With US orders ground to a halt, Wang, 36, who sells intelligent cookware out of southern China’s Guangdong province, looked elsewhere to fill the gap. After finding new buyers in Brazil, Japan, Malaysia and Cambodia, he learned what he describes as a key lesson: “Nothing is more important than the markets close to us.”

Stories like Wang’s have played out across China’s vast economy where businesses, large and small, scrambled to fill the void after temporary triple-digit duties – and the threat of their return – upended Chinese exports to the world’s wealthiest market.

The result has been a coup for China’s trade juggernaut.

Instead of seeing exports falter on lost US business, the world’s largest manufacturer has driven them deeper into other markets around the world – building on the country’s global economic footprint and hedges companies made during Trump’s first trade war.

The resilience gave Beijing confidence in its months-long negotiations with the US, which came to a head in October when leaders Donald Trump and Xi Jinping met and agreed to a truce that whittles new tariffs on Chinese goods down to 20%.

But the push also puts China on track to eclipse last year’s gaping nearly $1 trillion global trade surplus – a balance that’s irritated governments around the world and sparked Trump’s trade war in the first place.

There were already questions about the sustainability of China’s export blitz before data released last week showed exports unexpectedly contracted by just over 1% year on year in October – the first downturn since February.

Whether China can maintain its level of exports to the rest of the world – and expand back into the US market after the recent truce, is a consequential question for the world’s second-largest economy as it continues to struggle with lackluster demand from its own consumers, but doubles down on manufacturing as its economic cornerstone.

China’s trade resilience

So far this year, the shift in China’s export flows has been stark – and sent a clear message that, for China, the US is not irreplaceable.

While exports to the US dropped nearly 18% in the first 10 months of this year versus that period in 2024, they were up more than 7% to the European Union, 14% to countries in the Association of Southeast Asian Nations, and 26% to Africa, according to Chinese customs data released last week. Overall, exports rose 5.3%.

In Southeast Asia, that trade was buoyed by leaps in the export of machine tools, automobile parts and computer components. In Africa, construction machinery and green technologies have been key exports, analysts say, while parts of Latin America have seen significant growth in electric vehicles, chemical fertilizers and electronics, among other areas.

This trade engine was humming before the start of the trade war.

Already the world’s manufacturing superpower, China’s rapid climb to dominate green technologies like EVs, lithium-ion batteries, and solar panels, had driven up demand from countries looking to convert to renewable energy cheaply – and concern from those accusing China of unfair competition with subsidized products.

Some of those goods – like EVs and solar panels – were already effectively barred from the US market by high tariffs put in place in recent years, and China’s exporters have been building out trade across developing markets.

“(China) has prepared quite well for this,” said Jacob Gunter, who heads the economy and industry program at the MERICS think tank in Berlin.

“It wasn’t some miracle of foresight thinking to predict that the United States would escalate over time its trade and technology conflict with China, but China was (expanding markets) before the trade and tech war began, and ever since it’s started, that trend has really accelerated,” he said.

Even as many companies had to scramble to divert business from the US market in recent months, experts say the groundwork for the pivot was laid by Beijing’s decades-long push to build out its global economic footprint – expanding trade while also bankrolling ports, terminals and highways under Xi’s Belt and Road Initiative.

It’s also relied on an earlier push from Chinese firms to move supply chains and production centers out of China to areas from Southeast Asia to Mexico – where goods are shipped from China to be fabricated or finished.

“That’s the key for the so-called resilience of Chinese exports,” said Yao Yang, dean of the Di-shui-hu Advanced Finance Institute at the Shanghai University of Finance and Economics, who noted these investments began during Trump’s first term.

“Without those outbound investments, I don’t think that China can cope with the shock.”

A two-way street?

But Beijing’s trade resilience has also raised fears that a deluge of Chinese goods into other markets will wipe out domestic industries.

Countries have been hitting back with probes on Chinese goods, with the US and India, as well as Mexico and Brazil, together raising 79 anti-dumping and countervailing probes against Chinese goods in the first half of this year – a significant uptick from recent years before 2024, according to World Trade Organization data.

There’s also calls for exports or factory relocations to come alongside greater levels of local investment, knowledge transfer and more balanced trade.

For some Latin American countries, “deindustrialization is a big problem when Chinese companies start to invest … because they bring just the assembly, they don’t do technology and knowledge transfer,” said Diego Rodriguez, logistics and industrial practice leader at Americas Market Intelligence, a research firm in Miami, noting countries like Brazil are pushing back against this.

In Southeast Asia, the stronger flow of goods is a concern, according to Rebecca Sta Maria, former executive director of the Asia-Pacific Economic Cooperation secretariat.

“We feel as if we are being swamped. I remember one economy saying a ‘tsunami of Chinese goods coming into ASEAN.’ Of course that’s a concern to us,” said Sta Maria, now the director of the Institute for Democracy and Economic Affairs in Kuala Lumpur. But it wasn’t all negative, she added, because small and medium-sized businesses were using high-end components from China, making their products more competitive.

“I know that the Chinese government has acknowledged (the concern) to some extent, so now it’s how do we manage this?”

Beijing denies accusations that its goods are flooding markets. Its officials have instead taken Trump’s global trade shake-up as an opportunity to tout China as the reliable trade partner, while pledging to open its vast market wider to exporters and investors from around the world.

Observers say some countries may also be unwilling to throw up barriers to China at a time when they are facing higher tariffs on their own goods into the US – that’s especially when there is true demand in many countries.

In Africa, “it’s a two-way street,” said Capital Economics emerging market analyst David Omojomolo.

“These countries (in Africa) want to industrialize… there’s a massive electricity gap across the continent – solar panels are cheap and China’s got overcapacity … they need to send them somewhere, so of course, Africa is going to benefit.”

‘Getting squeezed’

Even still, manufacturers across China have struggled to fill the hole left by the drop in US exports.

Factory employees in recent months have described to CNN canceled shifts, mandatory furloughs and lost jobs as employers deciding to relocate out of China.

Garment maker Zhang Peipei in Jiangxi province told CNN she has been able to keep her 20-year-old business afloat through smaller revenue streams coming from outside the US. But she says the unpredictable US tariff policies have already caused “serious and irreversible long-term impact” without clear alternatives.

With her business now hanging on whether she can cut a deal with buyers in Mexico, Zhang said she didn’t feel “very confident,” even despite a potential return of some US business now, “since the US has been shaking up the foreign trade scene, the whole world is chaotic right now.”

And there are questions about whether China’s robust trade data this year showed true demand or a short-term push to get goods out of the country to stockpile them or ship them to the US via a third country with lower tariffs.

An analysis of US and Chinese trade data from April to July – including the height of the trade uncertainty – suggests that just less than a quarter of China’s trade diverted from the US was likely still ultimately ending up in the US, while the rest of the goods were finding alternative markets, according to Gerard DiPippo, a senior researcher at the RAND China Research Center.

“Still, l’m not all that confident that the final demand for all those (other) exports going to the Global South is actually going to be remaining in those countries,” he said, noting that exporters could also be building up offshore inventories as they waited to see how countries’ trade talks with the US played out.

“The big caveat,” he added, is that “the margins of Chinese exporters are almost certainly getting squeezed … they’re maintaining high volumes in real terms, but they’re doing it by cutting prices.”

The recent truce between Xi and Trump leaves tariffs on Chinese goods at around 47% on average, but could see the return of more US business.

But as uncertainty remains across the global economy, a driving focus for those in China, both in the factories and the government, will be on expanding how much the country’s own consumers buy domestic-made goods.

That’s the case for Wang, the cookware maker in Guangdong. Despite finding new clients outside the US, he is also making another pivot, directing more of his business to China’s domestic market, and less of it outside, he said.