China's March trade data revealed a significant divergence between exports and imports, resulting in the country's trade surplus narrowing to its lowest level in 13 months, according to UOB’s Ho Woei Chen [1]. In USD terms, exports slowed sharply to 2.5% year-on-year, falling short of Bloomberg's estimate of 8.6% and down from 39.6% in February. Meanwhile, imports surged 27.8% year-on-year, far exceeding Bloomberg's estimate of 13.9% and February's figure of 13.8% [1]. This led to a trade surplus of US$51.13 billion in March, a steep drop from US$90.98 billion in February [1].
The surge in imports was partly attributed to higher global energy and raw material prices, which are linked to the ongoing Middle East conflict. China’s imports of semiconductors and computers remained robust, and purchases of key commodities such as copper and iron were steady. In volume terms, imports of coal and refined petroleum products increased compared to March last year, while crude oil and LPG imports declined, likely due to supply disruptions in the Middle East and a gradual shift toward alternative energy sources [1].
Despite the export slowdown in March, China's overall trade performance in the first quarter of 2026 remained solid. Exports grew 14.7% year-on-year during the quarter, while imports rose even faster at 22.7% year-on-year. The cumulative trade surplus for 1Q26 was US$264.33 billion, slightly lower than US$271.09 billion in 1Q25 [1].
Looking forward, UOB notes that with geopolitical risks persisting, import prices are expected to face further upside pressure in the coming months. The report also cautions that a prolonged escalation of the Middle East conflict could weigh on global demand and pose risks to China’s export outlook [1].
CONCLUSION
China's March trade data signals a narrowing surplus driven by surging imports and cooling exports, largely influenced by geopolitical tensions and rising commodity prices. While first-quarter trade performance remains robust, ongoing risks may pressure import prices and threaten export growth in the months ahead.