China combines trade data for the first two months of the year to avoid distortions from the Lunar New Year holidays. The country set an annual economic growth target of 4.5% to 5% for 2026, its lowest in decades, according to multiple reports. Official data shows China's GDP grew by 5% in the first quarter of 2026 compared to a year earlier, exceeding economists' expectations of 4.8%.
The export growth accelerated sharply from a 6.6% increase in December 2025, marking the fastest growth in outbound shipments since October 2021, according to research. The trade surplus for January-February far exceeded the $169.21 billion recorded in the same period last year, research indicates, and economists had forecast a trade gap of $179.6 billion in a poll.
Regional export growth was robust, with trade with European countries growing by 27.8% and exports to ASEAN countries climbing by nearly 30% in January-February 2026. Sales increased to Japan (8.9%), Hong Kong (38.7%), South Korea (27.0%), Taiwan (28.7%), Australia (29.4%), the ASEAN countries (29.4%), and the EU (27.8%), according to research. Semiconductor exports rose an annual 66.5%, the fastest growth in well over a decade, research shows, while sales of refined oil products, including diesel, gasoline, aviation fuel, and marine fuel, rose 12.7% to 8.13 million tons.
Domestic economic indicators showed mixed performance. Industrial production rose by 6.3% in January-February 2026 compared to the same period last year, the fastest growth rate since September, according to data from the country's statistics bureau. Retail sales increased by 2.8% in January-February 2026, more than three times faster than in December, multiple reports indicate, while fixed asset investment unexpectedly grew by 1.8% in January-February 2026 after shrinking for the first time ever in 2025, according to Bloomberg. Economists had expected retail sales growth of 2.5% and industrial production growth of 5%, multiple reports show. Tourism spending rose by almost 19% compared to the same holiday last year, multiple reports indicate, and infrastructure investment increased by over 11%, the fastest growth for the period since 2021, according to multiple reports. Growth was driven by manufacturing, while property investment weighed it down, multiple reports indicate.
China's export growth slowed sharply to 2.5% in March 2026 compared to the same time last year, a six-month low, according to data released by the General Administration of Customs. The country's monthly trade surplus in March 2026 was just over $50 billion, the lowest in over a year, multiple reports indicate.
Geopolitical factors are influencing trade dynamics. China faces a 10% US tariff on most of its goods, which may be restored to pre-Supreme Court levels by early July, according to US Treasury Secretary Scott Bessent. President Trump’s renewed 2025 tariffs barely slowed China’s industrial momentum, as manufacturers redirected exports to Southeast Asia, Africa, and Latin America to offset the impact of U.S. tariffs, research indicates.
Strategic stockpiling and trade with North Korea have surged. China stockpiled key commodities needed by its manufacturers, including iron ore and crude oil, in the first two months of the year, according to research. China-North Korea trade surged 22% in the first two months of 2026, reaching $418.7 million, customs data shows.
The conflict in Iran is creating supply chain uncertainties. The surge in import values is likely due to rising global costs from the Iran war, according to economics lecturer Yixiao Zhou from the Australian National University. Economists say it's still too soon to know whether U.S. and Israeli strikes on Iran - and the shutdown of the Strait of Hormuz, a chokepoint for one‑fifth of global oil - will derail manufacturers in the months ahead, research indicates.
Policy implications are being debated. China’s resilient exports and lower 2026 GDP growth target could delay the rollout of economic stimulus, research suggests. The data reinforces policymakers' conviction that heavier investment in strategic sectors will lock in China's grip on global supply chains, according to research.
Key unknowns remain regarding China's response to the March export slowdown and the evolution of US tariffs. It is unclear what specific measures China will take to address the sharp slowdown in March exports. How the US-Israel-Iran conflict will impact China's trade and supply chains in the coming months is also uncertain, as is whether China will implement economic stimulus despite resilient exports and a lower growth target. The extent to which AI-driven tech demand will sustain China's export growth and how China's trade dynamics with the US will evolve with potential tariff changes in July are further questions.
According to research, an economist described the strength in integrated circuits and technology exports as well expected, in line with the artificial intelligence investment boom. The economist also described growth in clothing, textiles and bags exports as surprising, given their poor performance in 2025 amid challenges from Southeast Asia and South Asia. The economist further described China's export momentum could accelerate further in the near term, with March data likely to show factories rushing shipments to the U.S. to exploit the Supreme Court's tariff reprieve and Chinese firms muscling back into low value-added sectors like textiles. According to research, another economist described rapidly rising global defence spending as potentially lifting external demand for Chinese industrial goods, and noted there is also big demand for China's 'New Three': electric vehicles, lithium-ion batteries and solar cells. According to research, a third economist described the surge as mainly a reflection of strong global demand, especially for tech products, which are central to many economies. The economist also described whether the momentum lasts as depending largely on how long the AI-driven tech boom continues.