China’s export engine likely slowed in March as buyers chasing an AI-fueled future confront the hard reality of war in the Middle East, which has sparked an energy shock and revived market anxiety of past Gulf conflicts.
Exports from the world’s second-largest economy are forecast to have risen 8.6% year-on-year in dollar terms, according to a Reuters poll – a marked cooling from the blistering 21.8% growth logged in January and February.
March marks the first real test of whether enthusiasm for artificial intelligence – and the chips and servers it demands -could offset gloom unleashed by the global energy shock after Iran’s closure of the Strait of Hormuz, the strategic waterway for the world’s 20% oil and gas flows.
China roared into 2026 with outbound shipments far outstripping forecasts, powered by tech exports, raising the prospect it could smash last year’s record $1.2 trillion trade surplus. The Iran war raises doubts about that trajectory.
Even China, long criticized by trading partners for subsidy-backed, cut-price manufacturing, is not insulated from the hit to buyers’ purchasing power as fuel and transport costs rise.
Still, Chinese producers may yet gain ground as buyers seek cheaper options, said Fred Neumann, HSBC’s chief Asia economist. Decades of commodity stockpiling have also helped blunt the impact of raw-material shocks on factory gate prices, he said.
Economists divided on Chinese reaction to war
Economists were divided on how Chinese producers fared in the first full month under the shadow of war. Mizuho Securities had the highest forecast, projecting a 24% rise, ahead of Macquarie Group, which expected a 17% increase. At the other end of the scale, Citigroup forecast growth of just 3%.
A high base is also likely to be a drag, after Chinese factories rushed shipments a year earlier to beat US President Donald Trump’s April 2 “Liberation Day” tariff deadline.
China’s imports likely increased 11.2% in March, according to the poll, up from 19.8% in the January-February period.
South Korea’s exports to China – a bellwether for Chinese demand – rose 62.4% in March, led by a 151.4% surge in global semiconductor shipments on higher memory prices and robust AI-driven server demand.
March factory activity data out of China showed goods exports continued to support growth, but the war in Iran weighed on sentiment as commodity prices rose sharply, lifting input costs.
China’s trade surplus is forecast to narrow to $108 billion in March from $214 billion over January and February.
Trump is expected to visit China for a meeting with Chinese President Xi Jinping in May, a trip that could yield gains on farm trade and airplane parts but is unlikely to soften deep strategic rifts, especially over Taiwan.
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