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China’s trade thrives beyond the U.S.
08/08/2025
Despite falling U.S. demand, China’s exports grew—thanks to emerging markets. But transshipment clauses in Asian countries’ trade deals with the U.S. may pose risks
Since the first trade war erupted in 2018, China’s export landscape has undergone a profound transformation. The U.S., once China’s largest trading partner, has seen its share of Chinese exports fall dramatically—from 20% in 2018 to just 10% in Q2 2025.[1] Yet, despite this sharp decline, China’s total exports have not only held steady—they’ve surged. In Q2 2025, China’s exports to the rest of the world rose by 11% year-over-year, reaching a record-breaking USD 856 billion. In stark contrast, exports to the U.S. fell by 24%, dropping to USD 100 billion. This divergence highlights a dramatic change in China’s trade orientation, away from reliance on the U.S. and toward a broader, more diversified global footprint. While the export share to China’s neighbours, the ASEAN countries, rose rapidly, the increase in trade with Africa and the Middle East has been slower but is still remarkable.
Even in the face of elevated tariffs, Chinese products—especially semiconductors, ships, and autos—continue to find eager buyers across the globe. Much of this resilience stems from surprisingly strong external demand. Emerging markets have become increasingly important destinations for Chinese goods. Vietnam and Thailand, in particular, have become standout performers, with exports growing by over 20% year-over-year, partly reflecting workaround strategies by Chinese companies – finishing goods there ultimately designed for Western markets. China’s supply chains have also adapted. Many firms have rerouted goods through third countries or shifted production bases to mitigate tariff exposure, especially towards the U.S., since Donald Trump’s first term.[2] This flexibility has helped maintain competitiveness and sustain export momentum. As a result, China’s trade surplus surged to USD 586 billion in the first half of 2025, contributing 1.7 percentage points to gross domestic product (GDP) growth and helping the country stay on track to meet its “around 5%” growth target.
Since 2018, the U.S. share in China’s total exports has halved, while ASEAN countries have picked up in line with close economic cooperation; exports to other emerging markets have started to increase as well
Sources: Bloomberg Finance L.P., DWS Investment GmbH as of 8/5/2025
However, risks are likely upcoming. “While China’s exports have proved remarkably resilient, part of the success will depend on the further inclusion of transshipment clauses in trade agreements,” argues Elke Speidel-Walz, Chief Economist Emerging Markets. Transshipment clauses are provisions in trade agreements that impose higher tariffs or stricter rules on goods that are suspected of being rerouted through third countries to avoid direct tariffs—especially when the original components or production originate from a targeted country like China. Vietnam, a key re-export hub, has already come under scrutiny, with new provisions targeting Chinese-origin components.[3] If more countries or trade blocks adopt similar measures, China’s workaround strategies could face headwinds.
Nevertheless, the competitiveness of Chinese exports as well intensifying economic links with regions like Middle East and Africa is a structural trend that is likely to prevail.