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

China’s monthly automobile exports surpassed 1 million for the first time in June, as overseas shipments from the world’s second-largest economy rose 27%.

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

Sales of Chinese brands ranging from BYD to Jaecoo are booming, eating into the market share of established brands, especially in Europe.

Analysis by the Mercator Institute for China Studies (Merics) in Berlin showed that China was conducting a study. Surplus goods of €900 million (£767 million) a day This risks escalating tensions with the US and EU, which have previously accused China of “weaponising” trade as foreign policy.

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

Electric vehicle and hybrid car exports, which are exempt from the EU’s 2024 tariffs on Chinese EVs, have put the European industry under huge pressure, with recent warnings that employment in the sector will collapse.

Volkswagen, Europe’s largest automaker, plans to cut its 670,000-strong workforce by up to 100,000 as part of sweeping restructuring plans presented to its supervisory board last week.

Although proposals to close the four sites have not been approved by the board, their future is still being discussed as part of what CEO Oliver Blume called on Monday “the most comprehensive reorganization in the company’s history.”

Trade expert Rafael Jimenez Buendía, who analyzed Merics’ figures, said the increase in exports to the EU exceeded his own record sales forecasts.

China’s exports to the EU were expected to reach a new record of 2.12 tonnes yuan in the first half, but data released on Tuesday showed exports were 45 billion yuan ahead at 2,165 tonnes yuan.

China’s export growth was also driven by chip orders amid the global AI boom; data show exports of 32 billion integrated circuits.

The country’s high export figures are partly attributed to ongoing subdued domestic demand, raising fears of what many describe as a China shock 2.0, a repeat of the export surge to the US in the 2000s.

According to a recent report by consultancy Gavekal Dragonomics, the ratio of annual exports to total manufacturing sales reached 24 percent in the first four months of this year; This is the highest level since China’s accession to the World Trade Organization in 2001. While this rate was 18.3 percent in 2019, it increased to 22.3 percent last year.

“This may be considered high for a small export-oriented country, but it is remarkable for the world’s second largest economy,” the report said.