China exports jump 27% in June, car shipments top one million, while oil imports hit decade low

Trade surplus swells as exports and imports beat expectations

China's exports in June rose 27% in U.S. dollar terms from a year earlier, far outpacing the 18.2% forecast in a Reuters poll. Imports surged 36%, against expectations of 24%. The data, released by customs on Tuesday, extend a run of trade strength that analysts said was driven by global AI demand and aggressive pricing by Chinese manufacturers. Car exports topped one million for the first time in a single month, extending the rapid expansion of Chinese auto brands in Europe and beyond.

Continued export strength, mostly driven by AI, points to a better second half, coupled with a more expansionary policy mix, accelerated fiscal spending and mild monetary easing, as well as a de-escalation of the situation in the Middle East, which will benefit China through lower oil prices.

The trade surplus puts China on track to match or beat last year's record of $1 trillion, raising the risk of fresh tariffs from the United States and the European Union.

Oil imports slump to almost 10-year low

Crude oil imports fell 41.3% year-on-year to 29.27 million tonnes, or 7.12 million barrels per day (bpd), the lowest since October 2016, as refinery run rates dropped to 57.72%. The ongoing Iran conflict and the effective closure of the Strait of Hormuz have disrupted seaborne crude flows. Ship-tracking firm Vortexa said seaborne imports from the Middle East hit a 10-year low in June, while Iranian oil imports fell 40% month-on-month to below 800,000 bpd.

Refinery run rates were likely near a 10-year low, weighed down by weak domestic demand and refined oil product export restrictions. But if refined product exports are eased, run rates could see a partial rebound.

China's informal ban on refined product exports, imposed after the Iran war started, helped keep domestic fuel supplies stable but worsened the squeeze in Asian product markets already hit by Russia's diesel export ban.

Bill market regulation as domestic demand lags

The central bank issued guidance barring some banks from re-discounting bills at rates below 0.5%, sources told Reuters, after bill rates dropped as low as 0.01% at month-end. Banks, facing weak loan demand, had flooded the bill market to meet lending quotas, causing sharp swings that regulators fear are being used to speculate on credit growth. The move reflects broader concerns about sluggish household borrowing amid a prolonged property slump.

Car exports hit 1 million milestone as EU trade tensions rise

China exported more than one million vehicles in June, a record, according to customs data. The surge contributed to a widening surplus with the European Union, which reached 1.225 trillion yuan (135 billion pounds) in the first half of 2026, analysis by the Mercator Institute for China Studies said.

The export surge into the EU beat its own forecast of record sales.

The influx of electric and hybrid vehicles, which escaped the EU's 2024 tariffs, has intensified pressure on European carmakers. Volkswagen is planning to cut up to 100,000 jobs under restructuring plans put to its supervisory board last week.

This is the most comprehensive realignment in the company's history.

Geopolitical backdrop and the outlook for energy

The trade data follow months of turmoil in the Middle East. A U.S. and Israeli attack on Iran on February 28 triggered a conflict that shut the Strait of Hormuz, through which about 20% of global crude and product trade previously flowed. A 60-day ceasefire in June briefly allowed some tanker movements, but the truce ended last week with renewed U.S.-Iran strikes and Iranian attacks on ships. The brief reopening helped Asian refiners secure enough crude to cover needs through September, but product markets remain tight.