Quick Bites | China overtakes Japan as world’s biggest car exporter

Despite China’s significant structural problems – its real estate crisis, slowing growth, ageing population, youth unemployment and high debt levels – it has become the global champion in automobile exports. 

Yet even this success comes with problems. Years of supportive industrial policy and private sector investment have boosted China’s competitiveness in the industry, but a limited domestic market means sales are being forced offshore, and a lack of industry consolidation means low profitability.  

China’s annual vehicle exports, which surpassed those of South Korea in 2021 and Germany in 2022, are now on track to beat Japan’s this year, according to Moody’s data. However, sales volumes in China’s domestic market peaked in 2017, in line with slowing growth in the country’s middle-class boom and wider economic weakness. 

Source: FT


As of the end of July, 2.8 million vehicles had been exported from China this year, up 74% on the previous year. The problem is China has massive over-capacity in automobile manufacturing, and locals are opting more for cheaper second-hand cars or electric vehicles. 

Yet, despite overcapacity and slowing sales growth, the expected wave of consolidation in China’s auto industry has not materialised – partly because financial support from Chinese local governments and banks have kept unprofitable companies afloat. China has almost 100 manufacturers who put 80 to 100 models on the market every year. 

But where can it sell all these cars if the local market is already saturated? 

Because of the low vehicle utilisation rates in China, the local industry’s losses have ballooned in recent years and it won’t be easy to make money out of exports. 

Analysts expect China to hold its top position for years. According to forecasts, overseas sales of cars produced by Chinese companies will hit 9 million by the end of the decade, pushing their global market share to 30% in 2030, up from 16% in 2022. 

Chinese auto exports have mostly targeted developing markets in Europe and Asia, with Russia the top destination this year. The export wave is expected to intensify as Chinese EVs, which are significantly less expensive than rivals, gain a foothold, especially in Europe.


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