China – “factory to the factories”
China is quickly moving away from exporting finished goods to supplying semi-finished industrial components used in manufacturing elsewhere. This started with the Trump 1.0 Tariffs in 2018 and has accelerated over the last year.
Fortune Magazine calls China a “factory to the factories”, especially supporting production in Southeast Asia.
The World Trade Organization’s (WTO) rules on origin are complicated. Rules are one thing, reality is another. The bean counters will determine the percentage of local materials, labour and packaging that go into a product and hey presto, ‘Made in China’ suddenly became ‘Made in Thailand’ or ‘Made in Vietnam’.
Follow the numbers: China’s finished goods exports fell by 2% but exports of semi-finished products increased 9%.
China is diversifying into emerging markets where they will also find a growing market for their products.
The USA has reduced imports from China and has shifted to sourcing more from India and Southeast Asia. That’s not bringing manufacturing back to the USA, it’s just moving the vendor base.
Geopolitical realignment (who trades with whom) is a long-term structural shift.
Tariffs may be temporary, but global trade relationships are being permanently reshaped.
China continues to take the long view. Corporate America and its government can’t see further than next quarter’s results.
Source: Fortune Magazine “China is becoming a ‘factory to the factories,’ powering global manufacturing in places like Southeast Asia even as U.S. trade declines” March 20, 2026