China's export engine stutters as Iran war chills global demand

China's export engine slowed sharply in March as war in the Middle East triggered shocks to energy and transportation costs, hurting global demand and exposing the risks in Beijing's strategy of leaning on manufacturing to sustain growth.

Outbound shipments grew by just 2.5% in March in U.S. dollar value terms, customs data showed on Tuesday (April 14), a five-month low, and far below the 21.8% surge seen over the January-February period. Economists had forecast growth of 8.3% in a Reuters poll.

A sharp 27.8% surge in imports - the strongest since November 2021 - weighed on the balance. That compared with a 19.8% increase in January-February and forecasts for 11.2% growth.

China's status as the world's largest manufacturer and energy importer leaves it acutely exposed to a global energy shock. Diversified supplies and large oil reserves offer some protection, but uncertainty over the conflict's duration risks undermining artificial intelligence-fueled demand for chips and servers, blurring the growth picture.

-Wang Shubing, Xiaoyu Yin/Reuters