How China's exports triumphed over Trump's Liberation Day headwinds
Why sales of capital goods are driving geographic diversification of Chinese export markets.
China’s export levels have held up remarkably well in 2025, despite the tremendous headwinds unleashed by the Liberation Day tariffs announced by the Trump administration at the start of April.
Luo Zhiheng (罗志恒), director of the China Chief Economist Forum, argues that the resilience of China’s export growth can be imputed to two main factors.
The first is the ongoing geographic diversification of China’s export markets - towards less reliance upon the US and its OECD allies, and greater focus on the emerging economies of the global south.
The second is China’s ascendant role as a supplier of intermediate goods and capital equipment to other emerging economies, that are pursuing similar trajectories of catch-up development. Chief amongst such markets are the nations of Latin America as well as the member states of ASEAN.
Emerging markets soak up China’s exports
China’s total exports saw year-on-year growth of 6.1% for the first three quarters of 2025, marking their highest print for the past three years.
The figure is especially remarkable given that it arrives in the thick of mounting trade tensions between Beijing and Washington, and an ongoing succession of tit-for-tat tariff measures that have played out across the past six months.
In recent opinion piece (“罗志恒：压力下的突围——中国出口韧性从何而来，能否持续?”) Luo points out that the growth patterns for exports to different parts of the world provide a clear account of how China managed to keep its trade levels in fine fettle, even after the Trump administration launched its shock tariff measures.
China’s exports to the US dropped by 16.9% for the first three quarters, undermining its overall export growth to the tune of 2.4 percentage points.
This plunge in sales to the US also belies the claim often touted by observers, that a rush to buy Chinese goods before the tariffs did their worst has helped to buoy export levels.
Exports to two of China’s main trading partners - Russia and South Korea, also posted declines during this period, of 11.3% and 0.3% respectively.
In sharp contrast, exports to a slew of other regions - including both advanced economies and emerging markets, saw impressive increases in the first three quarters of 2025.
These gains collectively served to more than compensate for the post-Liberation Day decline in China’s exports to the US.
China’s exports to Africa, ASEAN and India all posted robust year-on-year growth that was well above the two-digit threshold, coming in at 28.3%, 14.7% and 12.9% respectively.
Exports to the advanced economies of the EU, UK and Canada also saw strong gains of 8.2% and 8.7% and 5.1% respectively, while exports to Latin America rose 6.9%.
All of this was enough to boost China’s overall export growth by approximately 6.3 percentage points.
The figures are part of a longer pattern of geographic diversification of China’s key export markets for almost a decade.
Since Trump’s first term in office as president, Beijing appears to have made a concerted effort to reduce its dependence upon the US and its OECD allies when it comes to export destinations.
During the period from 2017 - 2024, the US and EU share of China’s exports fell from 35.4% to 29.1%.
Luo believes that it is unlikely for advanced economies to restore their share of China’s export total in future, given efforts to diversify the geographic demand pattern.
He does forecast sharp growth in exports to advanced economies of hi-tech goods where China is ecking out a mounting competitive advantage - including electric vehicles (EVs), mechanical equipment, key components, as well as semi-conductors.
China as capital supplier to emerging economies
Much ado has been made about China’s emergence as an exporter of high-end tech products, most notably EVs, smart phones and household appliances.
Another trend which is arguably just as critical for the global economy, yet far less remarked upon, is China’s ascendant role as an exporter of intermediate goods and capital goods to the emerging economies of the global south.
These are goods and equipment that are used for the production of other goods. They play an essential role in the growth of any developing nation which is adopting the time-tested economic strategy of low-cost, export-driven industrialisation.
Luo argues that demand from emerging economies - chief amongst them ASEAN and Latin America - has already made intermediate goods and capital goods the “main force” driving growth in China’s overall exports.
For the first three quarters of 2025, intermediate goods exports saw year-on-year growth of 10.2%, contributing 4.7 percentage points to growth in overall exports.
Exports of capital goods posted growth of 6.9%, driving 1.4 percentage points in total export growth.
Luo notes that this rapid growth in exports of intermediate goods and capital goods is primarily the result of the relocation of key segments of industrial supply chains to parts of the world beyond China’s borders.
It’s also been driven by the efforts of Chinese enterprises to expand abroad, to capitalise upon the resulting dependence in other emerging economies upon key materials and equipment that are still produced in China.
During the period from 2017 - 2024, China’s exports of intermediate goods to ASEAN and Latin America posted average per annum growth of 11.6% and 11.8% respectively.
This new role for China has also helped to accelerate the geographic shift in its export markets away from advanced economies.
“Emerging economies such as ASEAN and Mexico are seeing rapid growth in imports from China, and ASEAN has already replaced the EU and US to become China’s number one export market,” Luo writes.
“During the period from 2017 to 2024, aside from 2023, China’s exports maintained rapid growth to ASEAN, with five years seeing export growth of over 10%.”
Looking to the future, Luo expects this trend to continue, as the economies of ASEAN and Latin America continue to climb towards higher segments of the global manufacturing chain.
This will result in greater demand for key intermediate goods and capital goods made in China, helping to buoy its export levels across the medium-term.