China is setting its sights on a significant milestone in the automotive industry, as it aims to surpass Japan and become the world’s leading car exporter by the close of 2023. The latest report from Moody’s Analytics underscores China’s formidable growth trajectory in the export realm.
The assessment by Moody’s Analytics reveals a compelling narrative. China’s exports experienced a substantial surge during the tumultuous pandemic period, leading to noteworthy achievements. Having already outpaced South Korea in 2021 and Germany in 2022, China has swiftly ascended to the rank of the second-largest car exporter on a global scale.
Currently, China is in hot pursuit of Japan’s position. The figures from the second quarter of 2023 reveal that China trailed Japan in car exports by a margin of 70,000 units. This is a significant reduction from the 171,000-unit gap seen during the same period the previous year.
A prominent economist at Moody’s expressed a confident projection, asserting, “With this export momentum, China is poised to catch up with and ultimately surpass Japan by the year’s end.” It’s noteworthy that Japan has held the title of the world’s largest car exporter since 2019. Driving this surge is the mounting global demand for electric vehicles (EVs). China’s adeptness in this domain has not only propelled its overall exports beyond pre-COVID-19 levels but has also elevated the nation’s revenues from EV exports, effectively doubling from the first half of the previous year.
In contrast, the automobile exports of countries such as Japan and Thailand, encompassing both traditional combustion-engine vehicles and EVs, have yet to regain their pre-pandemic heights.
China’s distinct competitive edge in lithium-ion battery production emerges as a pivotal factor. Moody’s Analytics identifies this advantage as a catalyst that bolsters China’s cost-effectiveness in the production of electric cars. A notable highlight is that China currently accounts for over half of the global lithium supply, a dominance attributed to lower labor costs compared to key competitors like Japan and South Korea. Furthermore, China holds more than half of the world’s lithium extraction capacity, cementing its position at the forefront of the EV revolution.
As the race to dominate the automotive export landscape accelerates, China’s ascendancy stands as a testament to its ability to navigate disruptions, capitalize on industry trends, and leverage its unique strengths to reshape global trade dynamics.*