China's booming auto exports and lessons from Japan

Last year, China surpassed Japan to become the top motor vehicle exporter. The nation was already the world's largest automaker, surpassing Japan in production in 2009; China accounts for nearly a third of global vehicle production today, with output surpassing 30 million in 2023.

We've charted 25 years of auto exports to compare Asia's two economic giants – illustrating different phases of China's economic development along the way.

We've added a third line to our chart, as well: the exports-to-production ratio for Chinese vehicles. This ratio allows us to observe the importance of the domestic market versus foreign shipments over time – and get a sense of the shape of the industry at a given moment.

Researchers in China have dubbed 2000-2010 an "exploration" stage for the Chinese auto sector. Exports rose in importance, but then fell back as more Chinese consumers acquired their own vehicles; car production became more oriented towards the domestic market from about 2009 to 2020. Chinese researchers have described much of this decade as an "oscillation period" for the importance of exports, which tended to rise and fall year-on-year.

As domestic economic growth has slowed in China recently, and as trade tensions lead to restructured global supply chains, the nation's automakers are going more global. Since 2020, the "acceleration stage" has seen the Chinese export-to-production ratio surge alongside exports generally.

This has echoes of the Japanese experience in the 1980s: amid rising trade friction between Tokyo and Washington, and the appreciation of the yen that followed the Plaza Accord, automakers like Toyota and Nissan deployed their industrial supply chain more globally. (Interestingly, Japan's exports have never recovered to pre-2008 levels.) The next stage in the "Japanese model" could see Chinese automakers establish more overseas manufacturing facilities and globalize their industrial chain.

Recent developments in this sector also include a surge in Chinese electric vehicle production, of course. (You can read our August story about Tesla's production in Shanghai here.)

As our second chart shows, the main destinations for China's auto exports include Russia – which was an especially important market pre-2016, and again since the sanctions on Russia that followed the escalation of the Ukraine war in 2022. The US market had a period of significance in the years leading up to the pandemic; that has waned.

UK and European Union demand for Chinese vehicles, meanwhile, has boomed; Mexico has also become an important market since 2018. (As recently as late 2015, the overwhelming destination for China's limited auto exports was "others" – i.e. other Latin American and Asian nations, and Africa.)

We've added a series of additional charts illustrating long-term global trends in the auto sector, the history of Japanese industrial globalization and more.

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