The latest actions from the Trump administration have reaffirmed the imperative for Chinese firms to reduce their dependence on the American market.
Trump’s 10% additional tariffs on all Chinese imports have predictably invited Chinese countermeasures. And markets remain fearful that Trump will continue threatening the 60% tariffs on all Chinese goods he promised to impose while on the campaign trail.
The risk of destabilization in Sino-American trade was further evidenced by Trump’s decision to scrap the $800 de minimis loophole on packages shipped into the US. If he did not hold implementation at the last minute, the US business of Chinese cross-border e-commerce firms like Temu and Shein, making up 60% of all de minimis packages, would have been wiped out overnight.
As Trump systematically restricts Chinese imports, European leaders may follow suit to stem a deluge of manufactured goods redirected from America. The European Union’s October 2024 decision to impose tariffs on “unfairly subsidized” Chinese electric vehicles may be a harbinger of an increasingly restrictive trade relationship with China, especially as Europe seeks to develop its strategic autonomy in high-value, future-oriented industries supporting its technological and green-energy ambitions.
Indeed, after a Commission on EU Competitiveness report explicitly called China a threat to Europe’s tech industry, the EU has initiated a slew of anti-dumping investigations into Chinese goods ranging from solar panels to plywood. It would be reasonable to conclude that at least some of these will end in sector-specific tariffs on Chinese imports, similar to Trump’s recent 25% blanket tariff on steel and aluminum imports.
The increasing restrictive measures on Chinese imports in America and Europe have rapidly shifted the Chinese export landscape from the West to the Global South. Data shows that, from 2022 to 2023, Chinese exports to the US declined by 22.5%, with those to Germany, France, the UK, Italy, Canada, Australia, Japan and the Netherlands falling above or near double digits.
At the same time, exports to the UAE, India, Turkey, Russia and Central Asia all grew above or at nearly double digits, reflecting the tightening of commercial relationships due to shifting supply chains stemming from Western sanctions imposed for the war in Ukraine.
Chinese shipments of cars and clothing are triggering local deindustrialization from South America to Southeast Asia, even as consumers applaud the high-quality China can now deliver at low prices.
However, as China Inc continues to pivot to the Global South, it faces a shortage of workers familiar with new markets outside of the West. The lack of Chinese people studying, working and living in many Global South countries makes it difficult for Chinese firms to localize their offerings.
Without “bicultural” employees who can bridge Chinese manufacturing and local preferences, Chinese firms may struggle to keep selling products that meet consumer demand.
This grassroots-level pivot to the Global South is first and foremost hampered by continued Chinese affinity for Western education. Since the country’s economic reforms in the late 1970s, generations of Chinese youngsters studied and then worked in the West, before returning home to create some of China’s most innovative and world-beating firms.
The same haigui phenomenon continues today, with the vast majority of the country’s nearly 1 million strong study abroad population based in the US (349,000), Australia (166,000), the UK (135,000), Japan (121,000) and Canada (105,000).
In contrast, the number of Chinese familiar with the Global South is glaringly lacking. Despite increasing interest due to affordability and geographical proximity, Southeast Asia is only home to approximately 50,000 Chinese students, with more than half in Singapore. Publicly available data on Chinese students in the Middle East, Africa and South America is scant, suggesting an insubstantial population.
China’s lack of a grass-roots presence in the Global South is not limited to students. The number of ethnic Chinese living in Africa and the Middle East is estimated at approximately 1 million and half a million, respectively.
Moreover, the newness of Chinese communities in these regions means they are less socially integrated, despite inevitable complexities in defining Chineseness. The Chinese physical presence in the Global South is minuscule next to the well-established, 5.6 million-strong Chinese American community.
Rectifying this lack of Chinese people familiar with the Global South requires a two-pronged approach. First, Chinese firms should make a more concerted effort to hire the increasing number of youngsters from the Global South who graduate from Chinese universities.
In 2023, China hosted more than 300,000 African students, with many learning about the Chinese language and culture while acquiring technical expertise. Chinese firms should actively look to hire these graduates to spearhead international expansion plans into their countries and regions of origin.
Second, the Chinese government should encourage youths to seek study-abroad opportunities in the Global South to develop an international career without the West. Measures such as recognizing the academic certifications from more top universities in the Global South and providing government-funded scholarships specifically geared toward non-Western universities would be steps in the right direction.
Understandably, many Chinese students hoping for the best education their money can buy are skeptical of the quality offered by Global South-based academic institutions. To mitigate such concerns, the first step may be to prod more students to look at Western institutions based on the Global South.
Dubai, in particular, has become an increasingly attractive, if still relatively unknown, destination for Chinese youth due to its combination of English-language programs offered by British and American universities and allowances for them to stay in the city after graduation to develop their careers.
By this logic, top Western programs in other parts of the Global South, such as Northwestern in Qatar, NYU Abu Dhabi and CMU Africa, deserve more attention. With a combination of Global South students in China and Chinese students in the Global South, China Inc should be able to source a future workforce culturally equipped to drive China’s gathering trade shift away from the West.