China exports growth in March misses estimates, imports surge most in over four years

China’s export growth declined to a six-month low in March as the Middle East conflict hit global demand outlook, while imports logged their strongest growth in more than four years.

Exports rose at 2.5% in U.S. dollar terms last month from a year earlier, China customs data showed Wednesday, missing Reuters-polled analysts’ median estimate for an 8.6% growth, and weakening from the combined 21.8% surge in the first two months of the year.

Imports surged 27.8% in March from a year ago, marking the strongest growth since November 2021, sharply beating expectations for a 11.2% rise, and accelerating from 19.8% in the prior two months combined.

China releases combined trade data for January and February due to fluctuations around the Lunar New Year, the country’s biggest holiday, which follows the agrarian calendar.

The world’s second-largest economy has remained reliant on trade for its growth despite rising tensions with the U.S. and higher tariffs. Net exports accounted for about a third of China’s economy last year.

While Beijing’s strategic oil stockpiles, a diversified energy mix, and tight price controls have cushioned the blow from surging oil prices, the export-reliant economy remains vulnerable to a global economic downturn resulting from a prolonged closure of the Strait of Hormuz.

In a press briefing on Tuesday, Wang Jun, China’s customs vice minister, said that global oil prices have experienced “fierce fluctuation,” creating a “complex and severe” trade environment.

“The uncertainty of the global macro outlook, driven by the conflict in the Middle East, likely weighed on the demand side,” straining exports, said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.

That said, China’s export momentum will be more insulated from higher energy costs and raw material shortage than other export-reliant peers, Zhang noted, due to the scale and efficiency of the country’s manufacturing sector.

China’s strategic and commercial oil stocks, combined with barrels in transit, cover well over 120 days of net imports, said Dan Wang, China director at Eurasia Group. China can largely absorb the shock by diversifying its energy sources as well as by falling back on coal, she added.

China’s crude imports fell in March from a year ago, down nearly 2.8% in terms of volume, and about 4.4% in U.S. dollar terms, according to a CNBC calculation of the official trade data. Natural gas imports declined 10.6% year on year to 8.18 million tons, the lowest level since October 2022, according to data compiled by Wind.

China’s total trade surplus stood at $264.3 billion this year as of end-March, shrinking 3% from the same period last year after surging to a record high in the first two months, as import values swell on tighter global supply.

“China cannot pass through the higher energy prices completely to the foreign consumers,” said Zhang, narrowing Beijing’s trade surplus.

China’s exports to the U.S. — which have dropped by double for every month since trade tensions escalated in April last year — fell 26.5% in March from a year earlier, while imports rose 1%.

China’s trade with the Middle East declined in March after two months of growth, customs spokesman Lyu Daliang said at a press briefing on Tuesday, calling for “a joint effort by all parties to stabilize and de-escalate the conflict.”

Meanwhile, the country’s rare earth imports more than tripled in value last month, and soybean imports grew a modest 20% by volume.

However, higher commodity and energy prices stemming from the conflict have started feeding into Chinese manufacturers’ input costs, threatening to weigh on firms’ already thin margins. Factory-gate prices in the country rose by 0.5% in March, climbing for the first time in more than three years.

The consumer price index rose by a slower-than-expected 1% from a year ago, as domestic demand remained under pressure.

The country is due to report its first-quarter gross domestic product on Thursday. Analysts polled by Reuters estimate a 4.8% increase, compared to a 3-year low of 4.5% in the fourth quarter of 2025.