Imports and exports

Sales of passenger vehicles in China for the first half of 2026 were 20.2% lower than the same period the year before, reaching only 8.7 million units, while overseas shipments of passenger cars in the same period surged over 70% to 4.3 million units compared to the first half of 2025. This is in effect a double negative because one number highlights the weakness of the domestic economy, and the other points to the risks that China is taking with its export tsunami, given the potential damage this has on other economies.

EV exports and batteries may be doing okay, but China’s property market is much more significant to its overall economy and is in bad shape, and consumer spending is incredibly low while unemployment is rising. The EV exports are based upon the quality of the cars, and their price, which beats anything out there from Germany or elsewhere, but at the heart at the rise of this industry is massive government subsidies.

Continued reliance on exports as opposed to consumer spending is in direct contravention to what they have been trying to do for at least the past decade, and the rise of automated production—with EVs being a great example of that—only exacerbates weak consumer spending. Internationally the global trading system is also suffering with the low RMB exchange rate, and China’s ever booming exports being two significant factors. Neither of these situations are sustainable in the long term.