Key facts
- China's monthly car exports surpassed 1 million units in June for the first time.
- Overall Chinese exports rose 27% year-on-year in June.
- China's trade surplus with the EU in the first half of 2026 was 1.225tn yuan.
- Exports of electric and hybrid vehicles to the EU saw a 12.7% increase.
- China exported 32 billion integrated circuits, fueled by AI demand.
China's monthly car exports surpassed 1 million units for the first time in June, a milestone contributing to a significant 27% year-on-year increase in overall overseas shipments. This robust trade performance positions China to potentially match or exceed its record $1 trillion trade surplus from the previous year, despite past trade tensions.
The surge is partly driven by the growing popularity of Chinese car brands, including BYD and Jaecoo, which are gaining market share from established manufacturers, particularly in Europe. Analysis from the Mercator Institute for China Studies (Merics) indicates that China's goods surplus with the EU reached €900 million daily in the first half of 2026, totaling 1.225 trillion yuan. This has raised concerns about potential heightened tensions with the US and EU, which has previously accused China of using trade as a foreign policy tool.
Exports of electric and hybrid vehicles, which are currently exempt from EU tariffs imposed in 2024, are putting considerable pressure on the European automotive industry. Volkswagen, Europe's largest car manufacturer, is reportedly considering reducing its workforce by up to 100,000 employees as part of a major restructuring. While proposals to close four plants were not approved by the supervisory board, their future remains under discussion.
Trade expert Rafael Jimenez Buendía noted that China's export growth to the EU exceeded forecasts. Beyond vehicles, China's exports have also been boosted by demand for chips, with 32 billion integrated circuits exported, fueled by the global AI boom. The country's high export figures are also attributed to suppressed domestic demand, leading to concerns about a 'China shock 2.0' scenario, reminiscent of the export surge in the 2000s that impacted the US industrial belt. The ratio of China's annual exports to its total manufacturing sales reached 24% in the first four months of the year, the highest level since its WTO accession in 2001, a remarkable figure for the world's second-largest economy.