Chinese President Xi Jinping.
China’s exports increased by 2.5 percent in March compared to last year, which was much slower than the previous two months. This has been seen due to the Iran War and its impact on energy prices and global demand. March export figures released by China’s customs agency on Tuesday fell short of analysts’ expectations and were well below the 21.8 percent export growth recorded in January and February. Imports grew by a massive 27.8 percent last month, which was more than the 19.8 percent annual growth recorded in the first two months of this year. Technology-related exports, including a huge surge in semiconductor shipments from China due to the global artificial intelligence (AI) boom, have fueled China’s strong exports into early 2026, but economists say the effects of the prolonged Iran war could weigh on overall global demand for Chinese exports this year.
How did exports decrease?
Gary Ng, senior economist for Asia Pacific at French bank Natixis, said the pace of China’s exports has slowed as the Iran war is beginning to affect global demand and supply chains. Economists led by Bank of America economist Helen Qiao wrote in a recent research note that despite a huge surge in China’s exports in January and February, external demand is likely to be weak due to the shock to the energy sector caused by the war.
He wrote that if this conflict continues longer than currently anticipated, risks will arise from a continuing slowdown in overall global demand. But other economists, including Bank of America, also noted that energy supply disruptions could further strengthen global demand for China’s renewable energy tech – such as solar cells, wind turbines and electric vehicles – while sustained demand for semiconductors fueled by the growing AI craze is expected to help maintain export momentum.
This also had an impact
Despite the shock in energy prices, export performance should remain solid in the coming quarters, driven by strong demand for semiconductors and green tech, Xichun Huang, China economist at Capital Economics, wrote in a note on Tuesday. Huang added that the late arrival of the Lunar New Year – which fell in mid-February – also likely negatively impacted China’s export figures last month, as some holiday-related disruptions continued into the month.
China’s shipments to the US have also been under pressure for the past few months due to US President Donald Trump’s increased tariffs on Chinese exports and increasing tensions between Washington and Beijing. Due to this, China has increased its exports to other regions including Europe, South-East Asia and Latin America. Analysts are also closely watching Trump’s proposed trip to meet Chinese leader Xi Jinping in Beijing in May. This trip was postponed due to the Iran war.
Strong export figures in 2025
China’s exports to the US fell 26.5 percent year-on-year in March, which was more than the 11 percent decline in January and February. At the same time, exports to the European Union and South-East Asia increased by 8.6 percent and 6.9 percent respectively. Chinese leaders have set a target of 4.5 percent to 5 percent annual economic growth for 2026, which is the lowest since 1991. China met its economic growth target of nearly 5 percent for 2025 on the back of strong exports — and a record-high trade surplus of USD 1.2 trillion. Analysts say that this year too, exports will continue to play a major role in maintaining economic expansion. Due to the long-running recession in China’s property sector, domestic demand and investment are being adversely affected.
War will not have much impact
Some economists believe that China has so far been in a very good position in terms of protecting itself from the effects of the Iran War. Due to this war, fuel prices are skyrocketing and there is a danger of global inflation getting worse. They say China’s vast oil reserves and diverse sources of energy mean it will be less affected by the fallout from the war — including shipping disruptions in the Strait of Hormuz, a key waterway for energy transport.
