China's Export Slowdown and Its Implications for Global Supply Chain Resilience

China’s export growth in 2025 has cooled from its early-year highs, with Q2 growth at 5.2% year-on-year and Q3 at 6.1% YoY, reflecting the toll of U.S. tariffs averaging 51.1% and global demand softening [1]. While diversification into Southeast Asia—ASEAN exports surged 18% in Q2—has cushioned the blow, the Geneva trade truce’s 32% month-on-month rebound in June 2025 exports to the U.S. is unlikely to offset long-term structural shifts [2]. The U.S. remains a critical but volatile market, with June 2025 exports to the U.S. down 16.1% YoY [3].

This slowdown underscores a broader rebalancing of global supply chains. Companies are no longer “all-in” on China. For instance, U.S. importers front-loaded shipments in March 2025 to avoid tariff hikes, but April and May volumes normalized as firms diversified to Vietnam, India, and Bangladesh [4]. The OECD notes that China’s high-tech exports—semiconductors and machinery—grew 2.5% in Q2 2025, but this pales against the 11% YoY surge in exports to non-U.S. markets [5]. The message is clear: China’s dominance is waning, and investors must adapt.

The Rise of Undervalued Alternatives

India is emerging as a manufacturing powerhouse. Its Production-Linked Incentives (PLI) program, targeting 14 sectors, has driven a recovery in manufacturing. The August 2025 PMI hit 59.8, signaling robust expansion, while the Index of Industrial Production (IIP) in January 2025 showed gains in metals, petroleum, and electrical equipment [6]. Despite a 1.4% slowdown in FY 2023-24, India’s focus on textiles, pharmaceuticals, and automobiles positions it to capture market share from China [7].

Vietnam is another standout. Its 2025 GDP growth of 7.52% in H1 was fueled by an 8.07% rise in industrial value-added output, with manufacturing PMI hitting 52.4 in July 2025 after four months of contraction [8]. The country’s digital transformation and green energy initiatives aim to boost the digital economy to 25% of GDP by 2025, making it a magnet for foreign investment [9].

Bangladesh offers a more speculative but high-growth bet. Its economy is projected to grow at a 6.5% CAGR from 2023–2032, driven by textiles, pharmaceuticals, and IT. While political instability and inflation (forecast at 10% in 2025) pose risks, the country’s low labor costs and strategic location make it a compelling alternative for nearshoring [10].

Rebalancing Exposure: A Strategic Playbook

Investors should prioritize sectors in these emerging markets that align with de-risking trends:
1. India’s PLI sectors: Electronics, pharmaceuticals, and automobiles.
2. Vietnam’s industrial zones: Focused on semiconductors and green energy.
3. Bangladesh’s textiles and IT: Leveraging low-cost labor and growing digital infrastructure.

However, caution is warranted. Bangladesh’s political uncertainty and India’s infrastructure gaps could delay returns. Vietnam, meanwhile, faces raw material shortages and U.S. tariff headwinds [11]. Diversification across these markets—rather than overexposure to one—will mitigate risks.

Conclusion

China’s export slowdown is not a collapse but a correction. Global supply chains are evolving toward resilience, not efficiency, and investors must follow. By rebalancing manufacturing exposure toward undervalued emerging markets like India, Vietnam, and Bangladesh, they can hedge against geopolitical risks while tapping into high-growth sectors. The key is to act before these markets become crowded—and their valuations inflate.

Source:
[1] Q2 GDP: China posts better-than-expected 5.2% growth in ... [https://www.cnn.com/2025/07/14/business/china-gdp-q2-economy-intl-hnk]
[2] China's Economy in H1 2025: GDP, Trade, and FDI ... [https://www.china-briefing.com/news/chinas-economy-in-h1-2025-gdp-trade-and-fdi-highlights/]
[3] International trade statistics: trends in second quarter 2025 [https://www.oecd.org/en/data/insights/statistical-releases/2025/08/international-trade-statistics-trends-in-second-quarter-2025.html]
[4] How 2025 Tariffs Are Changing China's Export Landscape [https://www.china-briefing.com/news/how-2025-tariffs-are-changing-chinas-export-landscape/]
[5] China's Imports in 2025: Key Trends and Strategic [https://www.china-briefing.com/news/chinas-imports-2025-trends-implications/]
[6] India Manufacturing Tracker: 2024-25 [https://www.india-briefing.com/news/india-manufacturing-tracker-2024-25-33968.html/]
[7] China Export Fall and Its Impact on Global Trade [https://blog.intoglo.com/china-exports-fall-impact-global-trade/]
[8] Vietnam Manufacturing Tracker: Update to July 2025 [https://www.vietnam-briefing.com/news/vietnam-manufacturing-tracker.html/]
[9] Vietnam's Economic Outlook for 2025 and Key Sectors ... [https://www.vietnam-briefing.com/news/vietnams-economic-outlook-for-2025-push-for-digitalization-and-sustainability.html/]
[10] Bangladesh Market Report | Global Forecast From 2025 To ... [https://dataintelo.com/report/bangladesh-market]
[11] Bangladesh in 2025: Political and Economic Landscape [https://www.jsheld.com/insights/articles/bangladesh-in-2025-political-and-economic-landscape-analysis]