China is accelerating its pivot to the Global South to reduce reliance on the United States, potentially creating “a new order of global commerce”. Chinese exports to the Global South – covering most of the developing world – have doubled since 2015, with growth seeing a notable uptick after the U.S.-China trade war during U.S. President Donald Trump’s first term, according to a new report by S&P. In the past five years, these exports have risen by 65% – tripling the pace seen in the previous five-year period. By comparison, exports to the U.S. and Western Europe grew by just 28% and 58% respectively over the past decade. “High uncertainties under U.S. tariffs and China’s slowdown will continue to motivate Chinese firms to head to the Global South,” the S&P analysts said. “The result could be a new order of global commerce where South-South trade becomes the new center of gravity and Chinese multinationals emerge as the new key players.” According to the report, China now exports about USD1.6 trillion to the Global South, more than 50% higher than its combined exports to the U.S. and western Europe at USD1 trillion.
Chinese firms have also stepped up investments in developing regions, particularly in manufacturing. Flows to the country’s four largest trading partners in Southeast Asia – Indonesia, Malaysia, Thailand and Vietnam – have quadrupled over the past decade, averaging USD8.8 billion annually. “These investments are likely to continue in the age of tariffs – not just to avoid new levies or secure resources, but to develop end markets and reduce reliance on U.S. sales,” the analysts said. “This diversification strategy may be one of the few feasible ways to manage the high uncertainties in the age of tariffs.”
The report pointed to Indonesia as the clearest example of how “Chinese firms could align their investments and operations with local development objectives”. The country had leveraged inflows of capital to rapidly develop its nickel industry and move further up the electric vehicle supply chain. Similarly, Chinese carmakers had quickly expanded their market presence by capitalizing on the energy transition in South and Southeast Asia, with sales growing thirteen-fold in Malaysia, doubling in Thailand, Indonesia and the Philippines, and rising by more than 50% in India and Vietnam over the past three years. Chinese expansion into the Global South has also been visible across other industries, including engineering, construction, machinery, equipment, consumer products, and services, the South China Morning Post reports.
