China’s change of direction could pull the rug out from under Trump’s punitive tariffs

While all eyes are on the geopolitical rivalry between the United States and China, the Asian country has quietly shifted the focus of its foreign trade from the developed world to the global South.

China’s economic exports grew by 10.7 percent in December 2024 compared to the last month of 2023. This was well above the 6.7 percent expansion in November and came as a surprise to market analysts, who had forecast a 7.3%, Asia Times news portal said in a report that provided insight into the aggregate data.

One could reasonably think that the reason for the big increase is some stockpiling prior to Donald Trump coming to power. The former real estate tycoon promised US voters to impose 60% duty on Chinese imports to the US. But the reality is that Chinese companies had realised earlier that it was time to control their exposure to North America. In this spirit, they had redirected a significant part of their exports to the emerging countries of the global South. In particular, they targeted countries where China has been developing infrastructure projects.

Brazil and Indonesia offer China a market of half a billion people

Since 2023, the poorer countries of the world imported more from China than the developed world. Exports to the United States accounted for 15% of the Asian country’s total exports in 2024, a pretty spectacular change from the 20% in 2018. In December, China sold $137 billion worth of goods to the global South, while to the developed world for only $108 billion. In December 2024 Indonesia was the largest buyer of China. With a population of more than 280 million, Indonesia is the world’s fourth most populous country. In December, Indonesia increased its imports from China by 50 percent as compared to December 2023. Brazil, with 212 million inhabitants, also expanded its Chinese imports nicely in the last month of 2024. These two countries, with a population of nearly half a billion people, each increased their imports from China by 20% in 2024 compared to 2023. A similar expansion was recorded in Vietnam and Kazakhstan. The latter country is Central Asia’s largest economy. Meanwhile, Europe and the US imported 3% and 5% more Chinese goods in 2023 and 2024 respectively. Japan and Australia reduced their imports from China.

Trump may be upset if he wants to punish China by raising tariffs

All this suggests that the new administration in Washington may be wrong when thinking China can be hit by high punitive tariffs. Indonesia has tripled its imports from China in the last four years. China has invested heavily in Indonesia under the New Silk Road programme. High-speed rail infrastructure, a container port, automated warehouses and a 5G mobile phone network are being built there. These developments could boost the country’s economy, which in turn could further increase its purchases from China. The New Silk Road investments have failed in some countries, but appear to be a success in Indonesia.

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