In February 2026, EU exports to China dropped 16.2% year on year, while imports rose 2.2%. As a result, the EU trade deficit with China widened by 14.1%, climbing to more than €1 billion a day.
In our view, Eurostat is likely to report a further sharp increase in Chinese exports to the EU in March and April, based on China’s first-quarter shipments to the bloc, many of which had not yet cleared EU customs.
What is particularly concerning is the worsening monthly trend in EU exports to China. They fell 5.1% year on year in January, then dropped a steeper 16.2% in February, for an average decline of 11% in January-February versus a year earlier.
Take with a pinch of salt. The EU is a single market, so goods cleared by customs in one member state may ultimately be consumed or used in another.
EU imports from China rose far more in volume than in value in January-February. The gap suggests that the bloc was absorbing more Chinese goods in physical terms than the euro figures alone imply.
On average, EU customs cleared nearly 10,000 tonnes an hour of goods from China at about €6.5 per kilogram on a CIF basis, including the value of the goods, freight and insurance.
According to Eurostat, EU imports of electric and hybrid cars from China rose 45% by value in January-February 2026. As expected, hybrids are on the verge of overtaking electric cars as the leading category.
EVs still made up the largest share of imports by value in January-February 2026, but their share fell sharply from 65% to 52%, while both hybrid segments gained ground. Non-plug-in hybrids rose fastest (124%), followed by plug-ins (88%), well outpacing the much slower growth of electric cars (16%).
The U.S. share of China’s March exports fell from about 12.8% in March 2025 to about 9.2% in March 2026, a very notable shift in just one year. Over the same period, the rest of the world’s share rose from about 87.2% to 90.8%, with the EU absorbing part of the decline in U.S.-bound exports.
In the first quarter of 2026, China exported far more to the EU than to the U.S. The gap widened sharply as exports to the EU rose, while exports to the U.S. fell.
China’s National Bureau of Statistics reported Q1 2026 real GDP growth of 5.0%, with GDP reaching 33.4193 trillion yuan at current prices. SOAPBOX had forecast 5.1% real growth and a nominal GDP level of 33.5 trillion yuan. Our estimated GDP deflator was close to zero, while the official figures imply a slightly negative one, around -0.15%. Nominal growth, at about 4.84%, therefore once again came in below real growth.
China’s economy is still growing faster on paper than household spending in the shops. In Q1, GDP rose 5.0% year on year, but retail sales increased only 2.4%, a reminder that consumption remains much weaker than overall growth.
China has repeatedly promised to buy more from Africa and widen market access, yet the trade relationship remains structurally unbalanced, with China’s surplus with Africa rising sharply.
Since Russia invaded Ukraine, China’s exports to Russia have grown by an average of 14% a year, and its imports from Russia by 12%. In Q1 2026, total China-Russia trade reached a record high, standing 68% above the level of Q1 2022, when the war began.
Looking at China-Israel trade data in the abstract, one would not easily infer the geopolitics behind it. China’s imports from Israel doubled in 2025 and have 103% growth early in 2026. The story is mainly one of Israel helping meet China’s semiconductor needs. At first sight, that can seem difficult to reconcile with Israel’s close relationship with the United States and China’s close ties to Iran.
But the relationship is more nuanced than that. China defines its ties with Israel as an innovative comprehensive partnership. The official Chinese formulation itself suggests compartmentalisation: regional policy is one thing, while economic and technological cooperation is another. Trade data, after all, record where goods come from, not political loyalties. In this case, they point above all to a narrow but high-value flow of semiconductors rather than to any broad strategic realignment. Trade with Israel is therefore not a broad political endorsement by Beijing, but a functional relationship centred on technology that China still finds useful.
That said, compartments can hold only for so long. The real question is whether this one survives 2026, as Israel’s role in the U.S.-Iran confrontation grows and Beijing remains close to Tehran.