Quick overview

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A sharp slowdown in exports combined with a surge in import prices pushed China’s trade surplus to its lowest level since March last year.

China has begun to feel the impact of the war in the Middle East and new U.S. tariff barriers on its economy. The country’s trade surplus in March fell to a 13-month low, driven by a pronounced deceleration in exports and a strong increase in the cost of imports. Still, analysts noted that the surplus for the first quarter of 2026 was the highest in four years.

The data surprised market analysts. Export growth had been expected at 8.3%, but came in at only 2.5%. The opposite trend appeared on the import side: economists had projected an 11.1% increase, yet imports surged 27.8%.

As a result, the trade surplus totaled about $51.13 billion, less than half the expected level and the lowest figure since March 2025.

Zichun Huang, economist at Capital Economics, acknowledged that “exports slowed last month and fell short of expectations, but this appears largely due to seasonal factors.” She added that export growth in the first quarter reached its highest level in four years.

Meanwhile, Lynn Song, economist at ING Group, said the surge in imports was mainly due to higher prices for high-tech goods.

As an example, he noted that China’s semiconductor imports rose 11% year-on-year in volume so far this year, but increased 45% in value, reflecting a sharp rise in prices.

Iran war and the impact on China

Analysts also noted that the impact of the war in Iran and the rise in global oil prices has not yet been fully reflected in the data.

China’s crude oil imports increased 8.9% year-on-year in volume, but their value fell 4.7%, while natural gas imports declined 4% in volume and 15.4% in value.

“It is likely that rising energy prices will push import values even higher in the coming months,” Song said. While stronger imports could help ease trade tensions with China’s partners, he warned that they may reduce the contribution of exports to economic growth.

Exports remain a key pillar of China’s economic expansion. According to a survey by Reuters, the country’s GDP is expected to have grown 4.8% year-on-year in the first quarter, a slight acceleration from the 4.5% growth recorded in the final quarter of 2025. The official figure is due to be released tomorrow.

Huang, however, remained optimistic, saying that despite the surge in energy prices, exports should remain solid in the coming quarters, supported by strong demand for semiconductors and green technologies.