China export growth cools to 8.6 percent amid Iran war

The export engine of China likely experienced a cooling period in March as the global momentum driven by artificial intelligence encountered the economic disruptions caused by the conflict in Iran. While the start of 2026 saw a surge in outbound shipments, a Reuters poll suggests that export growth moderated to 8.6% year-on-year, down from the 21.8% expansion seen in the January-February period. This shift marks a significant test for the global tech supply chain, which is currently grappling with energy price volatility. The escalation of hostilities in the Middle East has reignited fears of a sustained energy crisis, particularly following the closure of the Strait of Hormuz. This critical maritime corridor is responsible for the transit of approximately 20% of the world's supply of West Texas Oil, Brent Crude Oil, and Natural Gas. The resulting rise in fuel and transportation costs is beginning to weigh on the purchasing power of global buyers, potentially offsetting the high demand for AI-related hardware such as chips and servers. Despite these headwinds, some analysts believe that the competitive pricing of Chinese goods could provide a buffer. Fred Neumann, the chief Asia economist at HSBC HOLDINGS PLC, suggested that the country's long-term strategy of securing resources might mitigate some of the immediate pressure on production costs. > Decades of commodity stockpiling have also helped blunt the impact of raw-material shocks on factory gate prices. Market expectations for the March trade data vary widely among major financial institutions. MIZUHO FINANCIAL GROUP INC issued the most bullish forecast, anticipating a 24% rise in exports, while MACQUARIE GROUP LTD projected a 17% increase. In contrast, CITIGROUP INC offered a more cautious estimate of 3% growth. A high statistical base from the previous year, when exporters rushed to move goods before a tariff deadline in the United States, is also expected to impact the year-on-year comparisons. Regional trade data provides a mixed but somewhat supportive outlook. For instance, exports from South Korea to the Chinese market rose by 62.4% in March, largely fueled by a 151.4% jump in semiconductor shipments. However, the broader sentiment remains clouded by rising input costs and geopolitical friction. As the trade surplus is expected to narrow to $108 billion from the $214 billion recorded earlier in the year, focus is shifting toward an upcoming diplomatic meeting between Chinese leadership and the American administration, which may address long-standing strategic and trade rifts.