China’s monthly car exports have surpassed 1 million for the first time in June, as the country’s overall overseas shipments rose 27%. According to official Chinese customs data, this stronger-than-expected trade performance keeps China on track to match or beat last year’s record trade surplus of $1 trillion, achieved despite the curtailed tariff war initiated by Donald Trump.
The surge in car exports is largely attributed to the growing popularity of Chinese brands such as BYD and Jaecoo, which are gaining market share in Europe at the expense of long-established brands. Analysis by the Mercator Institute for China Studies (Merics) in Berlin revealed that China ran a €900 million-a-day goods surplus with the EU in the first half of 2026, risking heightened tensions with the US and the EU.
Exports to the EU increased 12.7% year on year, pushing the surplus to 1.225 trillion yuan. The export of electric vehicles and hybrid cars, which escaped the EU’s 2024 tariffs on Chinese EVs, has put the European industry under significant pressure, with recent warnings of a collapse in employment in the sector. Volkswagen, Europe’s largest car manufacturer, is planning to reduce its workforce by up to 100,000 as part of wide-ranging restructuring plans.
The export surge into the EU beat Merics’ own forecast of record sales, with China’s exports to the EU reaching 2.165 trillion yuan in the first half of the year. China’s export rise was also fueled by orders for chips amid a global AI boom, with data showing exports of 32 billion integrated circuits. The country’s high export figures have been partly attributed to continued suppressed domestic demand, fuelling fears of the impact of what many have described as China shock 2.0.
The ratio of annual exports to total manufacturing sales hit 24% over the first four months of this year, according to a recent report by Gavekal Dragonomics, a consultancy. This is the highest level since China’s accession to the World Trade Organization in 2001, and has been described as remarkable for the world’s second-largest economy.
