China is quickly pursuing export market diversification in response to the USA’ high-intensity tariff insurance policies, with warnings rising that South Korea might face difficulties.
On Nov. 28, the Financial institution of Korea launched a report titled “BOX: Evaluation of China’s Current Acceleration in Export Nation Diversification.” The report projected that “even when U.S. tariff insurance policies are eased, U.S.-China competitors is prone to proceed, and China will persist in its export diversification efforts going ahead.”
The report additional analyzed that “export nation diversification won’t solely cushion the decline in exports to the USA within the quick time period, however will even improve the affect of ‘Made in China’ in international locations aside from the U.S., together with rising markets, within the medium to long run.”
Certainly, China’s customs-based export progress price in comparison with the identical interval final 12 months has been rising from 5.6% within the first quarter of this 12 months to six.1% within the second quarter and 6.5% within the third quarter.
Whereas China’s exports have been initially anticipated to undergo important injury from U.S. tariff insurance policies, the Financial institution of Korea’s evaluation signifies that the sharp decline in exports to the U.S. is being cushioned by elevated exports to international locations aside from the USA.
Throughout the second and third quarters of this 12 months, China’s exports to the U.S. decreased by 26%, however exports to international locations aside from the U.S., together with the EU, ASEAN, and Africa, elevated by 12% throughout the identical interval. Accordingly, the HHI (Herfindahl-Hirschman Index), which displays the focus of China’s exports, has declined considerably this 12 months.
China’s export nation diversification started to turn out to be distinguished after the primary U.S.-China commerce battle in 2018 and has expanded additional with the implementation of U.S. tariff insurance policies this 12 months. China’s share of exports to the U.S. has additionally proven an accelerating decline from 19.3% in 2018 to 14.7% in 2024 and 11.4% within the first via third quarters of 2025.
The Financial institution of Korea acknowledged, “The current acceleration of China’s export nation diversification is quickly rising the dependence on Chinese language imports in international locations aside from the USA,” and identified that “if China’s manufacturing competitiveness is mixed with cutting-edge technological competitiveness reminiscent of synthetic intelligence (AI) sooner or later, China’s function because the ‘world’s manufacturing facility’ might turn out to be stronger and the worldwide dominance of Chinese language manufacturing might develop.” It then expressed concern that “on this course of, the difficulties of different manufacturing-centered international locations reminiscent of South Korea, Germany, and Japan will enhance.”
The financial institution additional expressed concern that “notably, our heavy and chemical industries are going through difficulties because of adjustments reminiscent of U.S. tariff insurance policies and the implementation of Europe’s CBAM, together with China’s rise.”
