China trade - resilience, diversification, and the push into international markets

• In a period of economic uncertainty, China is cementing its status as the world’s leading trading nation in goods, due to the depth and breadth of its supply chains, as it broadens its commercial relations to reduce reliance on any single market or region.
• Chinese companies are going global, with the country’s manufacturers becoming true multinationals with a substantial presence overseas, while international companies are using the Chinese market as a testing ground to develop new products.
• Trade finance solutions help build resilience into supply chains, helping both importers and exporters capture opportunities in the world’s second largest economy.

In a landscape shaped by changing tariffs, higher costs, and supply chain disruption, China has consolidated its status as the world’s leading trading nation.

The country’s trade resilience was evident in 2025 – a year characterised by heightened global economic uncertainty. Its goods trade surplus hit a record USD 1.2 trillion in 2025¹ due to strong exports and subdued local demand for imports. And even though merchandise shipments to the US fell by 20% last year², total exports increased by more than 5%³.

Over the last decade, China has steadily expanded its share of global trade, showing how the depth and breadth of its supply chains are a decisive advantage. It points to a subtle shift in trade relationships with the world’s second largest economy, as partners are focusing less on considerations like cost and market access, and more on reliability and innovation.

Chinese producers have won trust in times of global instability, due to their deep manufacturing capability, supply-chain maturity and technology enabled logistics. China’s continued investment in transport infrastructure, for example, lowers trade costs – six of the world’s ten largest ports by throughput are in China⁴, led by Shanghai. China has built 60 automated container terminals, leading the world in smart port construction⁵.

Furthermore, the huge scale of Chinese industry, which produces nearly 30% of global manufacturing value added⁶, gives it unique speed and adaptability. Relative insulation from volatile factors like global energy shocks were evident during periods such as the 2022 global inflation surge, when Chinese prices were significantly more stable than other economies in Asia.

“Reliability, and the trust that comes with it, is a valuable resource in today’s global trade environment,” said Vivek Ramachandran, Head of Global Trade Solutions, HSBC. “The resilience of China’s supply chains increased demand, during a period of widespread trade volatility.”

The evolution of Chinese trade is a story of diversification, as the country broadens its commercial relations to reduce reliance on any single market or region.

Chinese exporters have lowered their exposure to advanced economy consumers, with more trade running along fast-growing trade corridors that link China with the ASEAN nations, Latin America and the Middle East. HSBC Global Investment Research notes that this shift also aligns with China’s outbound direct investment, which is deepening commercial ties and supporting capacity expansion across these markets, alongside a rising share of supply-chain and intermediate-goods trade. Nations that are members of China’s Belt & Road Initiative (BRI) accounted for more than half of China’s total trade last year⁷.

Trade is being eased by expanded regional and bilateral deals. Last year, China and ASEAN upgraded their free-trade agreement, expanding it to include a broader set of aims including enhancing digital trade and trade in low-carbon products⁸.

In addition to shifting trade routes, the composition of China’s trade offering is also changing, reflecting deeper supply-chain integration alongside rising outbound investment links. Consumer goods for instance, now account for less than a third of China’s exports, with components and machinery used in production accounting for more than two thirds⁹. China is the main supplier of textile materials to Vietnam, which in turn has become a leading global apparel supplier¹⁰. China also became a net exporter of industrial robots for the first time in 2025¹¹.

China is also now an important exporter of services. Its services exports value soared by 58% between 2019 and 2025 to reach USD 385 billion¹². The largest source of China’s services exports is transport and logistics, reflecting income deriving from extensive Chinese investment in shipping as well as port and warehouse infrastructure overseas. Digital services like AI and cloud computing are fast growing categories, as China’s tech giants are major competitors in international markets.

Chinese exports are dominated by private sector firms, who make up more than 80% of the nearly 800,000 business entities which are involved in Chinese trade¹³. Co-ordinating payments between anchor buyers and their suppliers is a complex task. China-based firms often face pain points like manual processes and lengthy payment periods.

The increasing scale of China’s trade requires sophisticated financial offerings to ensure reliability. More trading partners mean greater corridor and documentation complexity, and an increased focus on FX volatility and liquidity planning, while new trade deals are accelerating the digitisation of trade.

Following the path of advanced economies, China is undergoing a transition from traditional trade finance based on letters of credit to supply-chain finance. This solution leverages the creditworthiness of buyers, allowing suppliers to receive early payments on approved invoices, enhancing liquidity and enabling them to reinvest in their operations. Receivables financing allows companies to convert outstanding invoices into cash.

There is huge potential for growth in supply chain finance in China, with research showing that much of the trade is conducted with traditional trade finance like letters of credit and term credit lines¹⁴. Receivables financing is increasingly perceived as an effective way for balance sheet management. Companies need structured trade working capital solutions with digital capabilities and access to a wide client base, so it is easier to finance companies of various sizes across the supply chain, helping with supply chain resilience.

A significant development that looks set to reshape global trade patterns and investment flows in the coming years is the so-called “Going Global” trend, as Chinese manufacturers become true multinationals with a substantial presence overseas.

“The growing ambitions of Chinese corporates means that they are looking to connect with even more trade partners, across a broadening range of markets. As a result, they are demanding more sophisticated trade finance services,” said Eric Yuan, Head of Global Trade Solutions, China, HSBC.

By moving downstream and closer to end consumers, Chinese companies can capture higher value-add in areas like research & development, design, sales and service in addition to the middle part of the value chain that comprises manufacturing. Overseas investment will therefore not only focus on building factories, but also making local hires in sales and after-sales service.

The push into international markets comes as China’s export product mix continues to move up the value chain, due to local technological advances in high-tech sectors from robotics to fibre-optic cables. China is now the world’s leading exporter of passenger vehicles, overtaking Japan on the back of rising competitiveness, as evidenced by the rapid spread of Chinese EVs across overseas markets¹⁵.

Chinese outbound investment is concentrated in green tech, with over USD 200 billion in projects announced since 2022 in over 50 countries spanning batteries, solar, wind, and green hydrogen¹⁶. Chinese enterprises announced overseas merger & acquisition deals worth more than USD 43 billion in 2025, with technology, media & telecoms, financial services and energy & power as the most active sectors¹⁷.

Chinese companies expanding abroad will be best served by banking partners that can leverage deep local experience in China alongside a global network that can support them in multiple markets, across emerging trade corridors. In terms of products, they can benefit from the full spectrum of payments, foreign exchange, and trade solutions – including innovative products like supply chain finance and receivables finance.

For businesses in the rest of the world, China presents an enormous source of demand for goods in sectors such as food, energy, healthcare and tech. After all, it has held the position as the world’s second largest importer since 2009. And as China’s economy moves up the value chain, so too have its demand for goods. For example, imports of integrated circuits and semiconductors have surged with the boom in AI investment, overtaking crude oil as China’s top import and reaching more than USD 400 billion in 2025¹⁸.

China’s rapidly growing agricultural imports from Latin America reflect the synergy of outbound investment and trade. Chinese investment in port infrastructure in Brazil has lowered logistics costs to a level comparable to shipping from the US, helping the South American country become China’s largest supplier of soybeans¹⁹. Peru’s exports to China increased 30% in 2025 following the opening of the China-backed USD 3.5 billion deep-water port of Chancay the previous year²⁰.

China remains a top destination for foreign direct investment, attracting USD 116 billion of utilised inflows in 2024²¹. Multinationals have shifted away from viewing China mainly a manufacturing hub. A major shift in the 2010s was the rise of “in China for China” strategies investing to meet local demand.

Now multinationals face growing competition, as the super-competitive domestic market has become a testing ground for international companies, based on the idea that if they can succeed in China, they can succeed anywhere.

The result is that multinationals are increasingly moving to a “designed in China for the world” strategy, leveraging Chinese innovation to compete globally. Examples include European carmakers jointly building electric vehicle platforms with their Chinese counterparts to make products that can compete within China and globally, and the increased number of pharmaceutical multinationals opening research & development centres in China, as the country now accounts for about 30% of global novel drug development²².

In the consumer goods sector, luxury goods highlight this trend. Multinationals have been adapting their business models to a slowdown, but industry executives still see China as the main driver of sectoral growth this year²³.

Overseas high-end brands are refurbishing their China boutiques, increasing online and offline integration by adding facilities for livestreaming, and introducing more sophisticated local cultural elements to their local product offering. Products that appeal to China’s next generation of digitally savvy consumers could be rolled out to customers in other markets.

To succeed in China’s competitive market, multinationals need to use every opportunity available to maximise efficiency, such as pooling capital across different jurisdictions. The People's Bank of China, the country's central bank, and the State Administration of Foreign Exchange announced a nationwide policy in December 2025 that allows eligible multinationals to centrally manage both renminbi and foreign currency funds across borders.

As China's role in global trade deepens and grows more complex: from factory floor to innovation hub, from export engine to outbound investor, the financial requirements of doing business in and with China are evolving rapidly. Key areas to consider:

• Corridor complexity: Are you capturing the right opportunities across China's fast-growing trade corridors with ASEAN, the Middle East and Latin America – and do you have the banking infrastructure in place to execute efficiently across them?
• Working capital: Are your suppliers being paid quickly enough to sustain their operations and loyalty? Could trade finance free up liquidity that is currently locked in your payables cycle?
• Treasury and liquidity: Are you making the most of China's expanding cross-border capital pooling rules to mobilise cash held in your Chinese operations and integrate it into your global liquidity structure?
• FX and risk: Do you have a clear strategy for managing renminbi exposure as your China revenues grow and your supplier base diversifies?
• Resilience: Is your supply chain structured to weather the next bout of global turbulence – whether tariff shocks, logistics disruption or geopolitical realignment?

HSBC is a leading trade finance bank²⁴. With an on-the-ground presence across Greater China and an international network spanning over 50 markets that can support your business at every step – from financing suppliers deep in the Chinese supply chain to structuring cross-border treasury solutions and managing the FX complexity of multi-corridor trade.