Chinese Firms Pivot to Global South Amid Rising US Tariffs and Slowing Domestic Growth: S&P Global
S&P Global Report Highlights Strategic Shift
Leading Chinese companies are increasingly turning to the Global South to sustain growth and mitigate risks from escalating US tariffs and weakening domestic demand, according to a new S&P Global report.
The report, titled “China Inc. Heads to Global South in the Age of Tariffs,” shows that the trend, which began to gather pace in 2018, has now become a defining feature of Chinese multinationals’ global strategy.
“Trade has been rapidly growing between China and the Global South,” said Charles Chang, S&P Global Ratings’ Greater China Country Lead for corporates. “China now exports over 50 per cent more to these regions, totaling $1.6 trillion, than to the US and Western Europe combined, which total to $1 trillion.”
Rising Trade and Investments
The report underscores how booming trade and investments have deepened China’s ties with developing economies. On average, China’s trade with its top 20 Global South partners now accounts for nearly 20% of these countries’ GDP.
“These investments bring substantial execution risks, but they are likely to continue — not just to avoid new levies or secure resources, but to develop end markets and reduce reliance on U.S. sales,” Chang explained.
Chinese firms’ investments in their four largest Southeast Asian partners have quadrupled over the past decade, averaging $8.8 billion annually. This reflects not just redirection of goods for re-export, but local production and integration into regional economies.
South–South Trade Becoming the New Centre of Gravity
According to S&P Global, the implications of this shift are far-reaching.
“As they continue to head to the Global South, the result could be a new order of global commerce where South–South trade becomes the new centre of gravity and Chinese multinationals emerge as the new key players,” Chang noted.
This reflects a broader structural rebalancing of global trade flows, reducing the dominance of the US and Western Europe in China’s external markets.
Pull Factors in the Global South
While tariffs and geopolitical frictions act as a push factor, many countries in the Global South are offering pull incentives that attract Chinese firms:
- Facilitating policies such as tax incentives and relaxed foreign investment rules.
- Deepening commercial ties under frameworks like the Belt and Road Initiative (BRI).
- Growing consumer demand in emerging markets across Asia, Africa, and Latin America.
Beijing itself has repeatedly emphasized the “rise of the Global South” as the “future of development.” The S&P report notes this vision is already shaping the strategies of Chinese corporates seeking resilience against global economic headwinds.
Why It Matters
This strategic pivot matters for both China and the wider global economy:
- For China: It provides alternative markets amid slowing domestic consumption and Western trade restrictions.
- For Global South nations: Chinese investments bring capital, technology, and infrastructure, though they also carry risks of dependency and debt.
- For global commerce: It signals a potential shift in the world’s economic centre from North–South trade (developed to developing economies) toward South–South integration.
Final Thoughts from TheTrendingPeople.com
The latest S&P Global findings confirm that China’s trade recalibration is no short-term reaction, but a long-term reorientation of global economic links. With exports to the Global South surpassing combined exports to the US and Europe, and investments embedding Chinese firms deeper into local economies, the balance of global commerce may be entering a new phase.
For policymakers, investors, and businesses, the message is clear: the Global South is fast becoming the new frontline of global trade — with Chinese companies leading the charge.