A new China shock ripples across the globe as exports surge outside the US

China’s trade surplus with the world has soared to nearly $500 billion this year so far, a 40 percent increase compared to the same period last year

Two decades after China upended the global economy with its rise as a low-cost manufacturing superpower, a second wave is now reshaping international trade—this time outside the United States. As President Donald Trump’s sweeping tariffs wall off the US market, China is redirecting its industrial output at full speed to other parts of the world, igniting a new round of economic dislocation that analysts are calling the next “China shock”, the New York Times reported.

China’s trade surplus with the world has soared to nearly $500 billion this year so far, a 40 percent increase compared to the same period last year. The redirection of its export engine—powered by state subsidies and a faltering domestic economy—is beginning to destabilize industries in countries as varied as Germany, Indonesia, Brazil and Thailand.

Export redirection replaces lost US demand

Trump’s tariffs have not slowed China’s manufacturing output; they’ve merely changed where the goods are going. Toys, cars, garments, and electronics that once flooded US ports are now heading for Southeast Asia, Latin America and Europe. China's electric vehicle exports, for example, have jumped by more than 64 percent this year, even as its domestic auto market slows and manufacturers engage in cutthroat price wars at home.

To offset a property crisis that has gutted household wealth, Beijing has funnelled credit and state support into export-heavy industries. Chinese global market share across a range of goods has grown, and the shift is proving hard to reverse, even in the face of mounting international pressure.

“Whether or not the US puts tariffs on China, it’s pretty much impossible to stop the shifts in flows,” said Leah Fahy, a China economist at Capital Economics.

The domino effect in emerging and advanced economies

The result is increasingly visible around the globe. In Indonesia, more than 250,000 garment workers have lost jobs in the past two years as factories shutter, unable to compete with an influx of Chinese textiles. Thai auto parts suppliers are shutting down due to Chinese EV competition. In Brazil, domestic automakers are demanding an antidumping investigation into Chinese car imports.

Even Germany, Europe’s manufacturing powerhouse, saw a 20 percent rise in Chinese imports last month. Local carmakers, already struggling with slow growth, are now facing intensified pressure from cheaper Chinese alternatives.

China’s dual export strategy reshapes trade policy

China’s recent strategy reflects a break from the expected trajectory of economic development. While it is producing more advanced goods like electric vehicles and semiconductors under its “Made in China 2025” initiative, it has also doubled down on low-end exports—reviving the very model that made it a global giant two decades ago.

“China is not developing the way economic theory suggests,” said Priyanka Kishore, an economist in Singapore. “This is a challenge because it exacerbates pressures on the rest of the world.”

Countries caught between two giants

With Chinese goods flooding their markets, many countries are confronting difficult choices. Some, like Vietnam and Indonesia, are benefiting from foreign companies relocating supply chains out of China. Others are attempting to quietly re-export Chinese products to the US But as Trump threatens to extend tariffs to countries like Vietnam and Cambodia, even these alternative paths are narrowing.

Policymakers now face a binary dilemma: accept the erosion of domestic industry or follow Washington’s lead and impose protectionist barriers. Each path risks backlash—either from China, which uses trade as diplomatic leverage, or from the US, which is redrawing supply chains along geopolitical lines.

“Supply chains are getting bifurcated,” said Sonal Varma of Nomura. “It has become a lot more difficult for countries to decide: Who do you align with?”

As China doubles down on exports and the US tightens tariffs, the rest of the world is bracing for more fallout. The new China shock isn’t just about cheap goods—it’s about geopolitical alignment, industrial survival, and a global trading system in flux.