Against a backdrop of rising EU-China trade tensions, Li-ion batteries show a dependence that runs in both directions. The EU relies heavily on Chinese batteries, but China’s battery export machine also leans heavily on the EU. This is not just another destination for Chinese battery exports. It is the battery export market.
China’s battery export surplus does not spread evenly around the world
The Chinese side of the data is striking. In Jan-April 2026, 41% of China’s worldwide Li-ion battery export value was recorded as going to the EU. The U.S. was a distant second, with 9%.
In money terms, China exported US$13.06bn of Li-ion batteries to the EU in the first four months of 2026. Exports to the U.S. were US$2.8bn. In other words, China exported almost five times more Li-ion batteries to the EU than to the U.S.
This is why the EU is not just another destination for Chinese batteries. It is the central foreign market for China’s battery export machine.
The code here is HS85076000, so this is a customs product category, not a company-level or brand-level view. But the direction is clear. If we want to understand where China’s battery overcapacity lands, the EU is the first place to look.
Asymmetric in politics, mutual in exposure
Eurostat tells the EU side of the story. EU imports of Li-ion batteries from China have moved from €0.8bn in Q1 2020 to €7.2bn in Q1 2026. That is roughly a ninefold increase in six years.
The latest move is also significant. In Q1 2026, EU imports from China rose 33.4% by value compared with Q1 2025. This is not only a long-term trend. It is still moving.
The structural dependence is even clearer in the full-year data. In 2025, the EU imported €28.49bn of Li-ion batteries from outside the EU. China accounted for €25.64bn of that total, or 90%.
The first chart shows why the EU matters so much to China’s battery export machine. In Jan-April 2026, the EU accounted for 41% of China’s worldwide Li-ion battery export value. Add the UK, Norway and Switzerland, and the wider European market absorbed almost half of China’s Li-ion battery exports.
The second chart shows the other side of the same relationship. For the EU, China is not just one battery supplier among others. It is overwhelmingly the external supplier. In 2025, China accounted for 90% of the EU’s extra-EU Li-ion battery imports by value.
For the EU, there is no painless solution. Keeping the status quo means accepting deep dependence on China, which serves China’s interests. Reducing that dependence means costs, friction and political confrontation. That is why this is not mainly a technical question. It is a test of political will.
China’s new outbound-investment regulation, effective from 1 July, is presented as support for companies going global. But the support comes with strings attached.
The regulation keeps outbound investment inside a state-managed system. Beijing can encourage, restrict or prohibit projects, require approval or filing, review deals on national-security grounds, and supervise later transfers or disposals.
The key point is that a Chinese investment abroad does not necessarily escape Chinese control. A factory outside China may still depend on Chinese-origin inputs, technology, services, data or technical support that remain subject to export controls and state approval.
The Meta-Manus case may have accelerated the publication of the regulation. In our reading, it exposed exactly the kind of gap Beijing does not like, when Chinese-linked activity moves abroad faster than the state’s control system.
Chinese capital can go out. But under the new regulation, it does not go out alone. The state goes with it.
The divergence shown here comes before the Trump-Xi meeting held in Beijing in May. In Jan-Apr, China’s rare-earth permanent magnet exports were already rising strongly to the EU while falling to the U.S. Whether the meeting changes that pattern is something only the next customs data will tell.
Europe tends to read the two-wheeler story through electrification. But Eurostat data points to something less expected and perhaps more immediate. EU imports of petrol-powered motorbikes from China are rising fast, while imports of electric bikes and mopeds appear to be moving in the opposite direction.
We estimate that EU imports of Chinese petrol-powered motorbikes could reach around €1.6bn in 2026. That would be a sharp increase from 2025 and almost four times the 2020 level, far above the projected value of electric bikes and mopeds.
It is another reminder that China’s export surges do not always arrive where the public conversation expects them. Europe talks about electrification, but one of the clearest China trade signals in European two-wheelers is still petrol-powered.
For most of the recent past, Taiwan exported more to Mainland China than to the U.S. During the first Trump administration, Taiwan exported about US$2.20 to Mainland China for every US$1 exported to the U.S. During the Biden administration, that gap narrowed, but Mainland China was still ahead: about US$1.33 for every US$1 exported to the U.S.
That has now flipped. In Jan-April 2024, Taiwan exported about US$1.20 to the U.S. for every US$1 exported to Mainland China. In Jan-April 2025, the figure rose to US$1.60. By Jan-April 2026, it had reached US$2.50.
The direction is clear: Taiwan’s export centre of gravity has shifted sharply toward the U.S.
Since Xi Jinping took power, mainland trade with Hong Kong had generally moved down from the 2013 peak and remained well below that level for years. The recent rebound is therefore notable, but it should be read carefully. It is driven heavily by gold and semiconductors not by a broad revival of ordinary trade with Hong Kong.
China produces naphtha domestically, but much of it is absorbed by its own petrochemical system, so it still needs imports. At first glance, those imports look strong. In Jan-April 2026, China’s naphtha import volume was up 20% year on year. But the four-month total hides the real story.
The strength came early. In January-February, China’s naphtha imports more than doubled year on year. The most likely explanation is industrial. New naphtha-fed ethylene cracking capacity had already helped pull very large volumes into China before the Gulf disruption showed up in arrivals.
Then the pattern changed sharply. Import volumes fell from 2.0 million tonnes in January and 1.8 million in February to 0.9 million in March and 0.6 million in April. Meanwhile, the average import value rose from US$0.57/kg in January to US$0.93/kg in April.
The March-April drop was broad, not limited to one supplier. Several Gulf and non-Gulf suppliers sent much less naphtha after February. Russia was the main exception. It partly recovered in April and appears to have acted as a delayed cushion. But it did not fully replace the missing flows.
So the story is not that China avoided the shock. It is that China entered it with a large early-year cushion, probably created by petrochemical demand, and still saw the flow tighten sharply after February.
Chinese footwear exports are not a small niche. They are close to US$50bn and rank among China’s top export categories.
That makes the unit-value signal worth watching. China Customs data show that the average FOB export value per pair has fallen markedly from its 2022 peak. By Jan-April 2026, it was almost 24% lower than in 2022, and even below the 2020 level.
This is a nominal figure in yuan, not an inflation-adjusted figure and not a dollar price. That makes the fall more striking, not less.
This is not proof of dumping. Customs unit values can move because of product mix, destination mix, quality or brands. But it is still a clear signal in a very large export segment.
This is not a direct count of Chinese projects abroad, nor a measure of their total value. It shows the share of China’s exports to each region linked to overseas contracted projects. Still, it is a useful gauge of where Chinese projects are pulling Chinese goods abroad.
Within those regions, the largest country-level anchors are Algeria in Africa, Russia in the broader European region, Indonesia in Southeast Asia, Saudi Arabia in the Middle East, and Brazil in Latin America.
SAFE data show that in Jan-April 2026, China paid around US$16bn for the use of intellectual property. That is the highest Jan-April figure under the current methodology for recording trade in services, introduced in 2015. It is also above the previous peak reached in 2021.
it is a useful reminder that self-reliance has limits. Even as China pushes hard for domestic innovation, its economy still pays large and rising amounts for the use of foreign technology, licences, brands, software, patents and other IP-related assets. If the current pace continues, 2026 could become a record year for China’s IP-use payments abroad.
Chinese outbound travel spending has recovered from the pandemic shock, but the rebound does not look strong anymore. We use SAFE travel-services data as a gauge for outbound tourism expenditure. It is not a perfect tourism measure, but it is useful because it captures how much Chinese residents spend abroad on travel-related services.
Our 2026 full-year estimate is lower than the 2025 total for a simple reason: the Jan-April figure is already below the same period last year. That weakness matters because the comparison includes a very favourable travel calendar. In 2026, China had an unusually long Spring Festival holiday in February.
The message is simple. Chinese travellers are back, but the spending impulse is not. Households still look careful with discretionary spending, even when they travel.
A new Federal Reserve note gives useful official weight to a pattern SOAPBOX readers will recognise. Today’s China Shock 2.0 is not just about exports rising fast. It is about a much larger Chinese surplus that the rest of the world has to absorb.
In the Fed’s framing, the key point is the imbalance. China is selling much more to the world, but not buying proportionally more from it.
In SOAPBOX terms, the story is familiar. Industrial policy, overcapacity, weak import pull and a much larger export machine.
The result is not just more Chinese trade. It is a larger global adjustment forced by China’s surplus. In 2025, that goods surplus was nearly US$1.2tn, equivalent to about 1.2% of the GDP of the rest of the world.