As global trade frictions resurface, particularly with renewed threats of tariff escalation targeting Chinese exports, understanding the regional distribution of trade reliance across China becomes increasingly important. While China’s national export performance remains resilient, with Q1 2025 exports rising 6.9% year-on-year to RMB 6.13 trillion (841.22 billion), the degree of exposure to foreign trade varies significantly across provinces. Some regions, especially those built on high-volume manufacturing and cross-border trade, are far more vulnerable to external shocks than others.

Trade dependency, typically measured as the ratio of a region’s total imports and exports to its GDP, provides a useful proxy for assessing tariff sensitivity. A high dependency ratio often reflects dynamic integration into global markets, but it also signals heightened exposure to geopolitical volatility and trade barriers.

Cities such as Shenzhen, Dongguan, and Jinhua (home to Yiwu) routinely record foreign trade volumes that exceed their total economic output. Meanwhile, border cities like Chongzuo in Guangxi have become critical nodes in China’s land-based trade with Southeast Asia. These areas stand at the forefront of new trade frictions, bearing the brunt of policy uncertainty, shipping disruptions, and shifting global demand.

This article by China Briefing examines which provinces and key industrial cities are most reliant on foreign trade, explores how sectoral composition shapes tariff vulnerability, and reviews the latest local and national policy responses aimed at mitigating external pressure. As China continues to navigate an increasingly fragmented global trading system, regional disparities in trade exposure will shape both the risk profile and resilience of the country’s export-driven economy.

Trade dependency ratio as a risk indicator

In the context of escalating global trade tensions, the trade dependency ratio – defined as the total value of imports and exports relative to a region’s GDP – serves as a critical metric for assessing exposure to external economic shocks. While high trade dependency often signals strong global integration and export competitiveness, it also points to greater vulnerability to tariff-related disruptions, especially when value chains are heavily dependent on foreign demand or imported inputs.

Provincial-level trade reliance

Across China, provinces along the eastern and southern coastlines display the highest trade dependency ratios. Guangdong, for instance, recorded over RMB 2.09 trillion (US$286.81 billion) in exports in Q1 2025 alone, powered by its manufacturing giants in Shenzhen and Dongguan. Jiangsu and Zhejiang also maintain substantial exposure, with both provinces ranking among the top three in terms of absolute export volume and consistently exceeding national averages in trade-to-GDP ratios.

Notably, trade-driven inland provinces like Sichuan and Chongqing have seen rising dependency as they integrate into transnational value chains and Belt and Road logistics corridors. While their overall trade volumes remain lower than the coastal heartlands, the rapid pace of growth, particularly in electronics and automotive parts, signals emerging exposure that warrants closer monitoring.

City-level manufacturing and export hubs

Within these provinces, specific cities exhibit outsized roles in foreign trade relative to their economic scale. Shenzhen and Dongguan remain core export engines, with each city’s trade volume exceeding local GDP in some years. Yiwu, under the jurisdiction of Jinhua in Zhejiang province, is another key player, specialising in small commodities and maintaining strong links with markets across Asia, Europe, and the Middle East.

Further inland, Chongzuo in Guangxi has emerged as a vital land port for ASEAN trade, especially under the Regional Comprehensive Economic Partnership (RCEP). While often overlooked in national trade discussions, these city-level nodes are acutely exposed to changes in border policies, shipping rates, and tariff structures.

As a result, both provincial and sub-provincial data are indispensable when evaluating who stands to lose or adapt the most in the face of shifting global trade policies. With Q1 2025 showing a record RMB 10.3 trillion (US$1.41 trillion) in total trade volume and a 6.9 percent growth in exports despite softer global demand, the stakes remain high for regions that have long staked their economic strategies on cross-border commerce.

Trade war scenarios: Which regions and industries are most exposed?

As global geopolitical tensions continue to shape trade dynamics, a key consideration for businesses and policymakers is understanding which regions and sectors within China are most vulnerable to tariff escalation or regulatory headwinds. Assessing export composition and market orientation at the provincial level provides a clearer picture of risk exposure under potential trade war scenarios.

Provinces with economies heavily reliant on specific high-risk export categories – such as consumer electronics, auto parts, and textiles – tend to face heightened exposure to trade frictions. Moreover, regions with a significant proportion of exports destined for the United States or the European Union are particularly susceptible to tariff shocks or non-tariff barriers.

Guangdong: High sensitivity to the US market and the electronics sector

Guangdong, long considered China’s export powerhouse, exemplifies a high-risk profile. Its robust electronics manufacturing base and deep integration with US-facing supply chains make it acutely sensitive to tariff changes. In particular, the province’s concentration in consumer electronics and components – industries commonly targeted in trade disputes – means that even marginal increases in trade barriers could yield outsized economic impacts.

Zhejiang: Regulatory friction for small commodity trade

Zhejiang, especially through its key city of Jinhua and the trading hub of Yiwu, leads in the export of small commodities. While diversification is relatively strong, the nature of these goods – often low-margin and dependent on streamlined customs procedures – makes them vulnerable to new compliance burdens, such as origin tracing requirements or heightened inspection protocols. In the event of retaliatory tariffs or trade friction, Zhejiang’s light manufacturing sector may face disproportionate regulatory costs.

Fujian: Vulnerability in apparel and footwear

Fujian’s export structure is notably concentrated in labour-intensive industries such as footwear and apparel, particularly for Western markets. These sectors are typically among the first affected by protectionist measures and face increasing scrutiny around labour and environmental standards. In a climate of escalating trade tensions, Fujian-based manufacturers may need to explore production diversification or shift toward non-Western markets.

Inland Provinces: Lower exposure, growing strategic role

By contrast, inland provinces such as Sichuan and Chongqing are less dependent on traditional Western markets. Their integration into global supply chains is increasingly supported by diversified routes, particularly through the China-Europe Express and regional connectivity initiatives under the Belt and Road framework. These logistics corridors not only reduce geographic dependency but also enhance resilience against unilateral trade actions.

Strategic takeaways for exporters and investors

Amid evolving global trade dynamics and rising tariff risks, both businesses and policymakers face mounting pressure to adapt. The shifting geography of trade exposure, combined with China’s proactive policy environment, offers several strategic insights for stakeholders navigating this complex landscape.

Assess risk and diversify strategically

Export-oriented companies – particularly those concentrated in high-exposure coastal provinces or sectors like consumer electronics, apparel, and automotive components – should reassess their risk profiles:

Geographic exposure matters: Firms must evaluate how susceptible their operations are to region-specific vulnerabilities, including reliance on markets facing trade tensions (e.g., the US and EU) or industry-specific regulatory scrutiny.

Diversification is key: Developing alternative markets, leveraging multilateral agreements, and exploring underutilised logistics routes such as the China-Europe Railway Express can reduce overdependence on volatile bilateral corridors. Similarly, investing in digital trade channels and bonded warehouse solutions can increase operational flexibility and reduce customs friction.

Navigating today’s trade landscape demands a combination of operational agility and policy foresight. For exporters, this means understanding geographic and sectoral vulnerabilities, while for policymakers, it calls for structural investments that spread resilience more evenly across China’s vast economic landscape.

By taking a long-term view, stakeholders can better prepare for the shifting realities of global trade and secure a more stable position in the next phase of economic globalisation.

This post was originally publish by Dezan Shira & Associates’ China Briefing with the title Mapping tariff risk: Which Chinese cities are most exposed to foreign trade?

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At the time of writing, the final result of the US election remains in the balance. The future of US-China relations will be a top foreign policy priority for whoever emerges victorious.

Biden Win

In the event of the most likely outcome: a victory for Democratic candidate Joe Biden.

Broad policy

• McGregor expects Biden’s approach to foreign policy to be much more multilateral, going back to the norms of foreign policy.
• Biden has a ‘Buy American’ policy that appears in part to be a response to Beijing’s ‘Made in China 2025’ effort, with a plan to put $400 billion towards US government procurement of US products, and to invest $300 billion in technologies such as quantum computation, 5G, and artificial intelligence.
• A Biden administration will impose a 10% surtax on American corporations that move offshore to sell products back to the US. “It is interesting that this doesn’t go after US companies that are in China to sell to the China market.”
• On tariffs: Biden has been negative about them, but McGregor says: “I don’t see him giving them up any time soon.” Many in Congress understand that tariffs are paid by US consumers and businesses, so there could be a reckoning: “But they also serve as real leverage with China, and you don’t want to drop your leverage.”
  Jim expects Biden’s policy to be “much more focused on human rights than the Trump administration has been.” This will inform policy towards Hong Kong, although the administration will also not want to “punish the Hong Kong people” with excessive sanctions.

Biden-Xi relations

• Biden spent a lot of time with Xi Jinping when he was vice president under Barack Obama; given anti-China sentiment in the US, “he has had to be defensive about that in the campaign.”
• Still, in the past, Biden has talked about the importance of the US-China relationship and the fact that the two countries have to get along.
• Biden has probably spent more time with Xi than any other US official having travelled with him both in the US and China.
• But he will want a “real dialogue” with Xi: “They’re not going to listen to a lot of nonsense.”
• China is going to have to climb down on its wolf warrior strategy in order to engage.
• There is one bilateral issue in Washington on which all agree and that is that China is a bad guy. “You say something nice about China in Washington these days, and you’ll be called a traitor. It’s really got that dark.”
• The US attitude is that many feel betrayed by China. There is a strong feeling that the US opened up its universities, markets and so to China, but that this goodwill has not been reciprocated. “This is the strong American attitude, and I understand that.”
• There is a strong feeling in Congress that the US needs to be tougher in enforcing international rules on China when it goes beyond its borders, with less emphasis on “sitting round a negotiating table trying to persuade China to change its model.”
• A big question for Chinese entrepreneurs now is whether they will be able to build big international companies, given the Communist Party’s moves to be more involved in private businesses and China’s ability to request data from them. “There’s this distrust of China Inc, and distrust of the Chinese government.”

Biden policy advisers

Influential people who are likely to shape US policy on China under Biden include:

• Tony Blinken – a former Deputy National Security Adviser. He has talked about the importance of reciprocity in US-China relations.
• Samantha Power – a possible Secretary of State. She has said that if you succumb to China’s bullying and intimidation, you can expect only one thing – more of the same. Like many former Obama administration people, she is now taking a harder line on China.
• Lael Brainard – possible Treasury Secretary. She has said China’s economy is now too large for it to pick and choose which rules it will follow.
• Ely Ratner – a key advisor who has said the China challenge is more about the US and its competitiveness.

A return to multilateralism?

• Biden may push for a revival of the Iran nuclear deal, and for the US to re-enter the Paris climate deal.
• He will “stop the destruction” of the WTO, but will push for reform to make it less easy for China to play rivals off against each other. “We do need a strong multilateral trade organisation, and China needs it as much as anyone.”
• Biden has also talked about forming a group of democracies partly in an effort to withstand China. There will be a “lot less worry” in Washington that this might offend China.
• Under Biden, the US may look to rejoin the CPTPP, but it may be hard to get back in. Withdrawing from the deal may have been the “dumbest thing the US has done since invading Iraq. It was so upsetting to those countries, they’re going to extract a big price to let us back in – and they should.”
• Biden is likely to be careful in his approach towards Taiwan. There is a lot of support in the US Congress for the US to pursue a free trade agreement with Taiwan, while Biden may support its entry into bodies such as WHO.

US Business Community

• McGregor was among those who helped to push for China’s entry into the WTO. “But China changed, first under Hu and Wen in their latter years, and then under Xi Jinping.”
• McGregor believes China is now going through a period of ‘reform and closing’, in contrast to the post-1978 ‘reform and opening up’ period. Beijing is focusing on reforming its own companies, but closing up to foreign companies that it can replace.
• US multinationals do still “need to be in China: If they are not in China they are going to lose out globally – you’ve got to be a player in China. You can’t not be there.” Most US companies are in China for the China market, and those companies are doubling down.
• Under Beijing’s new ‘dual circulation’ strategy, China may give more opportunities to companies in the tech and retail sectors.
• But companies have to go in with both eyes open. China “will welcome you – but it’s not their goal to have you there for the long term. To quote Mao Zedong, China will ‘Use the past to serve the present, let foreigners serve China.’”
• US business wants to be allowed to carry on operating in China, “but they also are going to have to show they care about the United States and are investing in the US at the same time.”
• Doing business in China “used to be like all-star wrestling. You got bounced around, but never really got hurt bad with no lasting damage. Now it’s like UFC – where it’s much more brutal and you can get hurt bad.”
• Jim’s advice: “You’ve got to really pay attention to policy – that’ll help you get through the minefield and you might even find opportunities.”

Trump Win

• A second Trump term may see a somewhat softer approach towards China.
• Trump will be focused on building back the US economy for a second time. If he’s going to do that, he’s going to need China. US companies have to be in China, and have to have good market share there.
• Trump “won’t need China any more to beat up.” He’ll start being nice to Xi Jinping again, start buttering him up.
• China hawks such as Secretary of State Mike Pompeo, or US trade representative Robert Lighthizer may drop out of the administration or be more marginalised in a second term. Matt Pottinger, who has been responsible for much of Trump’s approach towards China, has already said he will leave the administration.

Advice for the UK and UK business

• McGregor urges the UK not to return to the ‘golden era’ of UK-China relations: “China doesn’t respect anyone who sucks up,” he said.
• Post-Brexit Britain may be seen as “ripe hanging fruit among Western democracies” by China, but we should not let ourselves be intimidated. “You’ve got to be careful about putting yourself in a subservient position to China.”
• Britain has a strong reputation in areas such as tech, science and finance, and we should emphasise those qualities in doing business in China, while realising that “China’s goal is to learn what you do and then do it themselves.”
• Business should learn a lesson form Xi, who is preparing China for long term hostility from the outside world.
• “You’ve got to try to make yourself sanction-proof. But you have to look at the cost – are you making enough money in China to cover the cost of sanctions preparation?”

For more information on China policy contact torsten.weller@cbbc.org

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An unforeseen consequence of the ongoing trade war between China and the USA is a potential rise in pollution in China this winter. As China’s policy makers aim to boost China’s economic performance following an economic downturn blamed on the trade war, they have said “bye bye” to pollution control as they dial up the output of factories to ten.

Previous plans to curb steel production and coal use in a bid to reduce air pollution, which worsens in winter months, have been scrapped. China’s northern cities rely heavily on coal-fired power and last year steel producers in four major cities were forced to half their output during winter months and reduce their coking coal by a third. Another 28 cities were also forced to cut steel and aluminium output.

This winter, guidelines have indicated less stringent caps and levels of PM2.5 particulate matter must be cut by only three rather than five percent. The easing may have been prompted by a public outcry, claimed the Financial Times. “Winter curbs on coal, including on heaters used by many residents in smaller cities and villages, left millions freezing as local governments scrambled to provide gas heating.  By imposing emissions targets rather than specific production cuts, China shifted responsibility to local rather than central officials which could also weaken enforcement,” it wrote.

They have said “bye bye” to pollution control as they dial up the output of factories to ten

Elsewhere, a huge deal agreed to provide China with affordable, clean, Liquefied Natural Gas (LNG) looks to be on the rocks. China agreed to invest $43 billion into a LNG project in Alaska during Trump’s visit to China last year. Since 2016, the US has seen a boom in shale gas, leading to an abundance of LNG. This glut of cheap LNG would help wean China off dirty coal and was seen as a win-win but the growing trade war has led to China imposing a 10 percent tariff on $60 billion of goods, including LNG.

China is the second-largest buyer of LNG globally but has dialled back its purchases from the US, turning instead towards Qatar, Australia and Russia. An unfortunate consequence is that China will continue to rely more on coal than it had planned.

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Friction between the world’s two largest economies continues after Vice President Mike Pence accused China of meddling in the upcoming US Mid Terms. Russian interference in US elections “pales in comparison” with Chinese meddling, he claimed, following similar accusations by US President Donald Trump earlier in the summer.

No evidence was given for the accusation and cybersecurity experts contradicted the claims. Even the administration’s own secretary of homeland security, Kirstjen Nielsen, said: “We currently have no indication that a foreign adversary intends to disrupt our election infrastructure.”

The US doubled down when Secretary of State Mike Pompeo said that China and the US are in “fundamental disagreement,” during a tense visit to Beijing last month. Standing next to Pompeo, Chinese foreign minister Wang Yi said that “a direct attack on our mutual trust has cast a shadow on US-China relations.”

Security talks between the US and China planned for October were cancelled, with both sides blaming the other. This may have been due to the escalating trade war, the tense discussions over election tampering or perhaps the US Navy’s incursion into the South China Sea. The guided-missile destroyer USS Decatur sailed within 12 nautical miles of the Gaven and Johnson Reefs in the Spratly Islands as part of what the US Navy calls “freedom of navigation operations.”

It was later leaked that the US Navy was recommending the US Pacific Fleet conduct a series of operations during a single week in November as a major show of force to warn China. The exercise, it was reported, would involving US warships, combat aircraft and troops to demonstrate that the US can counter potential adversaries quickly on several fronts.

Meanwhile, Bloomberg claimed that China has inserted spy-chips in servers used by Amazon and Apple, allowing a back door to access computers and data – something Amazon, Apple and China have denied.

China needs to act globally if it wants to play globally

All in all, it’s been a tough couple of months for US-China relations. Accusations have been flying, both sides’ propaganda machines are working at full pelt and serious warning bells are ringing that suggest things could turn even nastier.

Trump has followed through on his tough stance on China that he promised during this election campaign. China, he says, has been stealing US jobs and unfair trade rules have led to the current US-China trade deficit. China has also been caught out, surprised that Trump has followed through on his threats of sanctions and tariffs, whilst gloating that the west’s democratic system has failed. Both sides need to work together to find a solution rather than continuing to spiral further and further apart.

Trump’s incessant desire to look to the past and to revive dying industries rather than promote new technologies, means that he is allowing China to leapfrog the US when it comes to new industries such as green-tech, fin-tech and AI. On the other hand, China positions itself as a paragon of free trade and globalisation, whilst restricting foreign competitors and subsidising domestic firms. It needs to act globally if it wants to play globally.

Trump thinks that trade is a zero-sum game. If one party is doing badly, it’s because the other is doing too well – trade is a war, which will be won or lost. This is not how trade works but China, who need to portray a strong image domestically and is not comfortable losing face on the world stage, is ready and willing to go head to head.

The repercussions of an escalated trade war are not inconsequential. All diplomacy is manifestly intertwined. Trade talks are held alongside discussions on other important subjects and sadly, urgent matters have been brushed to the side as trade dominates the time and energy of both the civil servants and the press. Human rights issues seem to have totally fallen off the agenda at a time when they are needed more than ever, and the environmental knock-on effects are becoming increasingly apparent. It is in the interest of not just the two countries involved but the world as a whole to start to find a compromise that will de-escalate the trade war before the two sides come to blows and the rest of the world is caught in the crossfire.

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It’s pretty challenging to keep up to speed with the current pace of President’s Trump’s trade talks. His penchant for late night tweets, often shifting major trade policies at the stroke of a few keys, has kept not just commentators and journalists on their toes but also global leaders. Presidents, dictators, friends and foes – few have any idea what the US President might do next and, therefore, the global ramifications his actions might cause.

Just last month, economist Andrew Collier wrote for FOCUS about the US-China trade war. The preceding weeks have already made it look vastly outdated.

To look at just some of the events of the last weeks: Chinese tech company ZTE were first blacklisted from America after being accused of being a threat to American state security and in breach of US embargoes. Days later, Trump then pledged to save the company from going under. The cost to the American supply chain was the reason given for Trump’s change of mind, but America’s reliance on China for support in negotiations with North Korea likely also proved significant.

“Trump accused Xi of being a world class poker player, perhaps he is finally realising that it’s not the USA that has the best hand”

Talks with North Korea’s leader Kim Jung Un were put on hold again last month after he accused American politicians of threatening behaviour when they compared the North Korean situation to that of Libya last decade. Commentators have suggested however that it was President Xi who encouraged Kim to take a harder stance following a meeting between the two Asian leaders in Dalian last month.

Is China, in fact, pulling the strings behind Kim’s actions?  There are certainly advantages if they can play a role in determining how talks play out between the US and North Korea. China are happy to use North Korea as a bargaining chip and then utilise this as leverage with America when it comes to their own negotiations – giving themselves better terms on trade deals for example.

Combining trade deals and politics has traditionally been avoided for exactly this reason. Dealing trade for trade is one thing but trade for politics is another. It also is something that is new to President Trump but something China is well versed in. Last month, Trump accused Xi of being “a world-class poker player” – perhaps he is realising that it’s not the USA that is holding the best hand.

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The first glimmers of a trade war between the US and China started with a June 2016 campaign speech by President Donald Trump in Monessen, Pennsylvania. An improvement in trade “means reversing two of the worst legacies of the Clinton years… First, the North American Free Trade Agreement, or NAFTA. Second, China’s entry into the World Trade Organization,” he told the town’s steelworkers. But it has taken the technical skills of Trump’s senior trade strategist, Robert Lighthizer – along with the gradual elimination of the free-traders in the cabinet, including Gary Cohn, the head of the National Economic Council – to launch the current round of demands on China.

Bypassing the World Trade Organization’s formal channels, on April 3, President Trump resorted to the little used security provisions of Section 301 trade law to introduce tariffs on 1,300 goods worth US $50 billion. Less than a week later his administration threatened to escalate that with additional tariffs on US $100 billion of goods. China retaliated with a measured response of a 25 percent tariff on American exports, including soya beans, aeroplanes and cars, clearly targeting states where President Trump has a strong base of supporters.

“There could be quiet backlash within China against American companies, favouring firms from Europe and Britain”

However, both sides are now moving more cautiously. The US Trade Representative is accepting comments on the proposed list until May 11, 2018, and will hold a public hearing in Washington in May, allowing significant time for the negotiations that are now being hinted at by both sides.

President Xi’s conciliatory speech at the Boao Forum on April 10^th attempted to bring the fires of trade rhetoric under control, and was warmly received by global investors and President Trump himself. But the measures he proposed – opening up shipbuilding, autos, insurance and the financial sector – are not major concessions. Shipbuilding is short of capital, apart from luxury firms like Tesla, foreign car manufacturers already invest in China, and insurance has been throttled back due to excessive expansion in risky assets. The banking industry could be a welcome area for investment but it is likely that China will steer foreign firms into the securities business, which is widely dispersed and highly risky, instead of the core commercial banks.

Given the potential for delays on both sides, it is likely that President Trump will send his main trade negotiator, Robert Lighthizer, to negotiate with China. Most observers assume President Trump presented the threat of hardcore tariffs as a first negotiating tactic that would then be softened during further discussions.

The bigger question may be the technology sector. China’s economics tsar Liu He said he rejected the Trump administration’s requests to back away from Beijing’s “Made in China 2025” programme, which is designed to allow China to compete globally in key technologies such as semiconductors and artificial intelligence. Apart from outright intellectual property violations, China’s ambitions may not fall afoul of trade laws and may simply reflect China’s growing global ambitions. This could set the stage for a new round of competition between the two countries.

Other nations, such as the UK, could benefit in two ways. First, the US-China negotiations could open up the economy to foreign firms, including British companies. It is not clear at this point where the talks will end up, but high-end autos could be one, affecting Tata-owned Jaguar and possibly Rolls Royce, among others.

Second, even if the US talks are successful, there could be quiet backlash within China against American companies, favouring firms from Europe and Britain. Provincial party secretaries and governors wield tremendous power to approve or disapprove joint ventures and could use this without getting the nod from Beijing. There could be a tacit and quiet “not-made-in-the-USA” policy among key Chinese decision makers.

Andrew Collier is the author of Shadow Banking and the Rise of Capitalism in China. Available at Amazon

For more information on the financial sector contact CBBC’s sector lead Juliet Zhou on Juliet.Zhou@cbbc.org

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