China Expands Record Trade Surplus With European Union

Trade tensions between the Government of China and the European Union intensified following the release of customs data showing a record high trade surplus for China in the first half of 2026. While the surplus reached historic levels, a significant portion of this trade is driven by European companies operating within China that export 40 percent of their output back to Europe, keeping profits within the European Union despite the trade deficit.

By July 2026, China expanded its trade surplus with all but three European Union member states compared to the previous year. The surplus quadrupled in Sweden and saw significant increases in Malta, Romania, and Finland. Major economies also experienced rising deficits, most notably Germany, where the deficit increased by 86.5 percent, followed by Poland, the Netherlands, Spain, and France.

These imbalances occur as the European Union seeks to rebalance economic ties. EU officials have expressed concern over industrial overcapacities and undeclared Chinese state subsidies, contributing to a broader geoeconomic rivalry as both parties approach an October deadline.