China's exports in March increased by 2.5%, a sharp slowdown as the war in Iran raises uncertainty.

Data on March exports released by China's customs administration on Tuesday fell short of analysts' expectations and were sharply lower than the 21.8 percent export growth recorded in January and February. Imports last month surged 27.8 percent, following a 19.8 percent year-on-year increase in the first two months of this year. Exports of technology-related products, including a jump in semiconductor shipments from China driven by the global AI boom, fueled strong Chinese export growth at the beginning of 2026. However, economists warn that the consequences of a prolonged war in Iran could impact overall global demand for Chinese products this year. "Chinese exports have slowed as the war in Iran begins to affect global demand and supply chains," said Gary Ng, senior economist for Asia Pacific at French bank Natixis. Despite the strong rebound in Chinese export growth in January and February, demand is likely to weaken due to the energy shock caused by the war, noted Bank of America economists led by Helen Qiao in a recent research note. The risks, they wrote, "would stem from a persistent global slowdown in aggregate demand if the conflict lasts longer than currently expected." Elevated tariffs by U.S. President Donald Trump on Chinese exports and tensions between Washington and Beijing are also weighing on Chinese shipments to the U.S. in recent months, prompting China to boost exports to other markets, including Europe, Southeast Asia, and Latin America. Analysts are also closely watching Trump's planned visit to Beijing in May to meet with Chinese leader Xi Jinping, following a postponement caused by the war in Iran. China's leadership has set an economic growth target of 4.5 to 5 percent for 2026, the lowest target since 1991. In 2025, China achieved its targeted growth of "around 5 percent" thanks to strong exports and a record trade surplus of $1.2 trillion. Analysts believe exports are likely to remain a key driver of economic growth this year as well, given that the prolonged crisis in the domestic real estate sector continues to pressure domestic demand and investment.