China’s monthly car ‌exports top 1m for first time as overall trade soars

China’s monthly car ‌exports topped 1m for the first time in June as overall overseas shipments from the world’s second biggest economy rose 27%.

Official Chinese customs data showed that a stronger-than-expected trade performance kept China on track to match or beat last year’s record trade surplus of $1tn (£748bn), achieved despite Donald Trump’s curtailed tariff war.

Sales of Chinese brands ranging from BYD to Jaecoo are booming, eating into the market shares of long-established brands, particularly in Europe.

Analysis by the Mercator Institute for China Studies (Merics) in Berlin showed that China ran a €900m-a-day (£767m) goods surplus with the EU in the first half of 2026, risking heightened tensions with the US and the EU, which has previously accused China of “weaponising” trade as foreign policy.

Exports to the EU increased 12.7% year on year, pushing the surplus to 1.225tn yuan (£135bn).

Exports of electric vehicles and hybrid cars, which escaped the EU’s 2024 tariffs on Chinese EVs, have put the European industry under huge pressure, with recent warnings of a collapse in employment in the sector.

Volkswagen, Europe’s largest car manufacturer, is planning to reduce its 670,000-strong workforce by up to 100,000 as part of wide-ranging restructuring plans put to its supervisory board last week.

While proposals to close four plants were not approved by the board, their future is still under discussion as part of what the chief executive, Oliver Blume, on Monday called the “most comprehensive realignment in the company’s history”.

Rafael Jimenez Buendía, a trade expert who analysed the figures for Merics, said the export surge into the EU beat its own forecast of record sales.

It had expected China’s exports to the EU to reach a new first-half record of 2.12tn yuan but the data released on Tuesday put it 45bn yuan ahead, at 2.165tn yuan.

China’s export rise was also fuelled by orders for chips amid a global AI boom, with data showing exports of 32bn 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, a repeat of the exports surge in the 2000s to the US.

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, the highest level since China’s accession to the World Trade Organization in 2001. In 2019, the ratio stood at 18.3%, rising to 22.3% last year.

“That would be considered high for a ‌small export-focused country; for the world’s second largest economy, it is remarkable,” the report said.