Economy

China’s Export Strategy: How Geopolitical Tensions Are Reshaping Global Trade and Boosting Growth

China shifted exports from the US to Southeast Asia due to trade war, focusing on higher-end goods.

October 26, 2025, 11:41 AM

A bustling container port in Shanghai, China, with stacks of colorful cargo containers and large cranes under a dramatic sunset sky.

A vast container port in Shanghai, China, is illuminated by the warm glow of a sunset, with numerous shipping containers and massive cranes visible. By dongfang / Shutterstock.com.

Executive Summary

Flagship Chinese companies have diversified their export markets away from the United States towards less-developed regions, such as Southeast Asia, since the 2018 US-China trade war.

Chinese manufacturing has shifted to higher-end exports like consumer electronics and automobiles, moving up the value chain from traditional goods.

This strategic reorientation allows Chinese firms to strengthen global supply chains, expand international footprints, and build resilience independent of traditional markets.

The Story So Far

The strategic reorientation of flagship Chinese companies, including their diversification of export markets away from the United States and a shift towards higher-end manufacturing, is a direct consequence of the US-China trade war that began in 2018. This geopolitical tension compelled these firms to explore new markets, particularly in less-developed regions like Southeast Asia, while simultaneously moving up the value chain to focus on more sophisticated exports in response to challenges in the U.S. market.

Why This Matters

The US-China trade war has fundamentally reoriented China’s export strategy, compelling flagship companies to diversify away from the United States towards less-developed regions like Southeast Asia, while simultaneously shifting towards higher-end manufacturing. This strategic pivot strengthens global supply chains and builds economic resilience, allowing China to pursue new avenues for growth independent of traditional Western markets.

Who Thinks What?

According to a Goldman Sachs report and strategist Si Fu, flagship Chinese companies have successfully diversified their export markets away from the United States towards less-developed regions like Southeast Asia and shifted to higher-end manufacturing since the 2018 US-China trade war, resulting in continued overseas revenue growth.

This strategic reorientation, driven by challenges in the U.S. market and geopolitical tensions, allows Chinese firms to leverage low-cost advantages, build robust global supply chains in emerging economies, and foster new avenues for growth independent of traditional markets.

Flagship Chinese companies have increasingly diversified their export markets away from the United States and shifted towards less-developed regions such as Southeast Asia since the onset of the US-China trade war in 2018, according to a Goldman Sachs report. This strategic pivot has also seen these firms move up the manufacturing value chain, focusing on higher-end exports while strengthening global supply chains and expanding their international footprint.

Market Reorientation

Data from the investment bank indicates a significant divergence in export growth. Chinese exports to non-US markets have registered a compound annual growth rate of approximately 7.5 percent since 2018. Conversely, exports to the United States have declined by 0.6 percent annually over the same period.

Si Fu, a China equity portfolio strategist in Goldman Sachs’ Global Investment Research Division, noted that 2018 marked a critical juncture as escalating trade tensions between Washington and Beijing compelled Chinese companies to explore new markets. She stated that overall overseas revenue continues to grow for these firms.

Shift to Higher-End Exports

Beyond market diversification, China’s manufacturing sector has also evolved. The production of traditional goods like toys and textiles has given way to an increased focus on consumer electronics, automobiles, and specialized items such as Pop Mart figurines. This reflects a deliberate move along the value-added curve.

For many Chinese companies, the strategist explained, the necessity to shift away or diversify their export destinations was a direct consequence of challenges faced in the U.S. market. This reorientation allows them to leverage historic low-cost advantages and build out robust supply chains in emerging economies.

Strategic Implications

The ongoing reorientation of China’s export strategy, driven by geopolitical tensions and a push for higher-value production, underscores a fundamental shift in its global economic engagement. This trend highlights China’s efforts to build resilience and new avenues for growth independent of traditional markets.