Trump Tariffs Seen Fostering New China-Global South Trade Order

Economic data last week underscored the pain of US tariffs on China’s economy, with factory activity rising at the slowest rate since November and investment in property and infrastructure falling. Exports to the US slumped in July for a fourth month in figures reported Aug. 7, though shipments to countries in Africa to Southeast Asia more than made up for the dip.

Chinese officials have increasingly sought to bolster relations with developing nations in recent months, reducing trade barriers and signing new trade deals. In June, President Xi Jinping said he would eliminate all import tariffs on almost all African nations, and he has attended summits and held meetings with Latin America and Southeast Asia leaders.

China’s trade with its 20 largest partners in the Global South now makes up on average 20% of those countries’ gross domestic product, according to S&P Global. As well, more than half of China’s total trade surplus is with the Global South, compared with 36% for the US and 23% for Western Europe.

There has been some pushback that Chinese officials will need to navigate, S&P Global noted, including workers and industry groups rallying against cheap imports that are dislocating local industry.

“Despite these risks, high uncertainties under US tariffs and China’s slowdown will continue to motivate Chinese firms to head to the Global South,” its economists wrote in the note.