Barclays: China's March export slowdown was mainly Lunar New Year distortion, not an external demand shock

Overview

This is a Barclays FICC Research event commentary on China's March trade data. The report's core view is that the slowdown in March export growth from 21.8% in Jan-Feb to 2.5% was mainly a seasonal swing caused by Lunar New Year timing and a high base in Q1, rather than a sudden deterioration in external demand or a demand shock from the Middle East conflict. On a Q1 basis, exports still grew 14.7% y/y, above the 5.5% growth recorded for full-year 2025, and seasonally adjusted three-month-on-three-month growth rebounded sharply in March to 11%.

Core views

The report believes exports will remain an important support for China's GDP growth in 2026. Green tech and AI-related goods are the main sources of export resilience, including electric vehicles, lithium batteries, wind power equipment and semiconductors. The Middle East conflict could weigh on global growth and disrupt trade logistics, but the rebound in March PMI new export orders and signs of rising green tech orders suggest the near-term negative impact is limited; if the conflict persists, it may instead accelerate the global green transition, which would benefit China's green tech exports.

Analysis framework

The analysis cross-checks monthly y/y growth, combined Jan-Feb data, full Q1 data, and seasonally adjusted three-month-on-three-month growth to identify and strip out high-frequency distortions caused by the Lunar New Year timing shift. The report also breaks down exports by destination and product category, looking at changes across markets such as the United States, the European Union, the United Kingdom, ASEAN, Africa, Latin America, Japan, South Korea and Taiwan, as well as categories such as semiconductors, automobiles, home appliances, furniture, machinery and electrical products.

Methodology notes

• Macro Data AnalysisLunar New Year Distortion and Base-Effect Analysis

  Compare March standalone export growth with combined Jan-Feb data and full Q1 data to identify seasonal distortions caused by Lunar New Year timing.

  The report notes that over the past decade, the average fluctuation between March and Jan-Feb combined export growth was about 17 percentage points, while in Q1 2026 it was about 19 percentage points; therefore, the March slowdown is closer to the historical Lunar New Year distortion pattern.

• Macro Data AnalysisSeasonally Adjusted Momentum Analysis

  Use seasonally adjusted three-month-on-three-month growth to observe export momentum.

  The report says seasonally adjusted three-month-on-three-month export growth in March was 11%, above December's 1.8%, indicating that export momentum remained strong after removing seasonal factors.

• Sector BreakdownProduct and Destination Contribution Decomposition

  Track the structural sources of export growth by destination and product category.

  The report finds semiconductors were the standout among March's major export categories, while home appliances, furniture, general equipment and machinery weakened noticeably; by destination, growth slowed across most major markets, and exports to the United States continued to decline sharply.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China macro growth

  Exports support GDP

  Strengths

  Q1 exports grew 14.7% y/y, seasonally adjusted momentum improved, and green tech and AI-related goods made notable contributions.

  Weaknesses

  March export growth came in far below expectations, and growth slowed across most major destinations.

  Comparison

  Q1 export growth was above the 5.5% level for full-year 2025.

  Risks

  External demand weakness, geopolitical conflict and trade logistics disruptions could weaken export support going forward.

• Semiconductor exports

  Representative of AI-related export resilience

  Strengths

  March semiconductor exports rose 84.9% y/y, and Q1 growth was 78% y/y, making semiconductors a standout among major product categories.

  Weaknesses

  The report does not provide a breakdown of semiconductor export prices, volumes or end-demand.

  Comparison

  Semiconductors performed much more strongly than weaker categories such as home appliances, furniture and general equipment and machinery.

  Risks

  The global technology cycle, export controls and geopolitical policy could affect sustainability.

• Green tech exports

  Core driver of export growth

  Strengths

  Orders for electric vehicles, lithium batteries, wind power equipment and solar-related products show strong overseas demand.

  Weaknesses

  Some markets may face tariff pressure, trade barriers or capacity competition.

  Comparison

  Green tech categories are growing faster than traditional consumer goods exports.

  Risks

  Changes in overseas policy, trade frictions and project delivery cycles may create volatility.

• Industrial commodity imports

  Improving import signal

  Strengths

  Iron ore imports turned to +11.5% y/y in March, steel imports rebounded to +2.2%, and the decline in copper imports narrowed.

  Weaknesses

  Copper imports were still negative, and soybean import volumes remained below the Jan-Feb average.

  Comparison

  Compared with Jan-Feb, iron ore and steel imports improved significantly.

  Risks

  Uneven domestic demand recovery and commodity price volatility may affect import sustainability.

Key data

• March export growth2.5% y/yIn U.S. dollars, below Bloomberg consensus of 8.6% and Barclays' forecast of 12%.
• March import growth27.8% y/yIn U.S. dollars, above Bloomberg consensus of 13.9% and Barclays' forecast of 15%, marking the fastest expansion in more than four years.
• Jan-Feb export growth+21.8% y/y YTDIn U.S. dollars, forming the comparison base for March's high-base and Lunar New Year distortion.
• Q1 export growth14.7% y/yStill clearly above the 2025 full-year export growth rate of 5.5% after stripping out the single-month Lunar New Year distortion.
• March export 3m/3m seasonally adjusted11% 3m/3m saAbove December's 1.8%, showing improved export momentum.
• Q1 electric vehicle exports+78% y/yOne of the strongest green tech export categories.
• Q1 lithium battery exports+50% y/yOne of the strongest green tech export categories.
• Q1 wind power equipment exports+45% y/yOne of the strongest green tech export categories.
• Q1 semiconductor exports+78% y/yA representative example of AI-related and high-tech export resilience.
• March semiconductor exports+84.9% y/yContinued to accelerate after +73% in Jan-Feb, making it a standout among major export categories.
• March exports to the United States-26.5% y/yWeakened further from -11% in Jan-Feb.
• March energy-related import volumesNatural gas -11% y/y, crude oil -2.8% y/yIn the first month after the Middle East conflict, energy-related import volumes contracted.

Impact & implications

At the macro level, the report tends to interpret the March export slowdown as noise rather than a trend reversal, meaning that Q1 GDP may still receive support from exports. At the industry level, external demand resilience is stronger for green tech and AI-related supply chains, with semiconductors, electric vehicles, lithium batteries and wind power equipment benefiting relatively more; traditional durable goods and some machinery categories show more visible pressure.

Risks

• The Middle East conflict could weigh on global growth and disrupt trade logistics.
• Export growth across major destinations slowed in March, especially exports to the United States, which fell 26.5% y/y.
• If there is genuine external demand weakness beyond Lunar New Year distortion, monthly exports could continue to miss expectations.
• Trade policy, tariff adjustments, sanctions and export controls could affect green tech and semiconductor exports.
• Weakness in energy and automobile import sub-items suggests the structure of domestic and external demand remains uneven.

What to watch

• Whether April and subsequent export data confirm that March was only a Lunar New Year high-base distortion.
• Whether PMI new export orders can extend March's rebound.
• Green tech export orders, including solar modules, wind power equipment, electric vehicles and energy storage systems.
• Whether high semiconductor export growth can continue and whether it is affected by AI demand and trade policy.
• The impact of the Middle East conflict on shipping, energy prices and global demand.
• China's Q1 GDP data and exports' contribution to growth.