China's trade surplus with the European Union hit a record $83 billion in the first quarter of 2026, with Chinese electric and hybrid car sales to Europe nearly doubling year-on-year to $20.6 billion, according to analysis by the Mercator Institute for China Studies (Merics), a Berlin-based think tank specialising in Chinese affairs. The surge has been driven partly by strong European demand for Chinese EVs from brands such as BYD, and was compounded by a 16% fall in EU exports to China, leaving the bloc increasingly exposed to what analysts are calling a prolonged "China shock." The imbalance has intensified pressure on Brussels, which has already imposed tariffs of up to 35% on some Chinese car brands and is advancing a "Made in Europe" industrial strategy, though China has threatened retaliatory countermeasures and warned the proposed EU Industrial Accelerator Act violates fair-competition principles.