China exports may benefit selectively, but a broad pandemic-style boom is hard to replicate

Overview

The report discusses whether Middle East geopolitical disruption will lift China’s global export share as it did during the pandemic period. The key conclusion is that China may continue to benefit in structurally stronger and deeper supply-chain-linked areas, especially the "new trio," electrification, energy security, and supply-chain resilience-related capital goods. However, this shock differs from the pandemic, being mainly about energy prices and supply constraints that weigh on global real income, demand, and China’s terms of trade, so it is difficult to replicate the broad export boom seen during the pandemic.

Core views

The report views any export upside for China as "selective." During the pandemic, China lifted its export share by about 2 percentage points by controlling the epidemic earlier, restoring industrial capacity sooner, and benefiting from a shift in global demand toward electronics, medical supplies, and home-related products. The current Middle East conflict may strengthen demand for green technology and capital goods, where China retains scale, cost, and supply-chain-depth advantages, so partial share gains are possible. But the energy shock is likely to shrink the total global demand pool and push up China's imported energy costs, which would squeeze upstream output and midstream-downstream profit margins. Even if export volumes or shares improve, the contribution to final demand and real income is likely to be more muted.

Analysis framework

The report uses the pandemic-era shift in export share as a reference, decomposing China’s gain into in-sector share gains versus changes in global sectoral demand composition, and then comparing these with current Middle East-related energy shocks, global demand, terms of trade, and performance of key export sectors. The analysis focus is not simply whether China can increase share, but whether any share gain can translate into real export growth and final demand.

Methodology notes

• Export share decompositionDecomposition of sectoral share change versus global demand structure change

  Decompose China’s export-share increase into China’s share change within each industry and changes in each industry’s weight in global exports.

  Evidence from the pandemic period shows that China had broad in-sector share gains and also benefited from structural expansion in faster-growing demand industries such as electronics, electrical equipment, textiles, and light industrial consumer products.

• Macroeconomic shock comparisonPandemic shock versus energy-supply shock comparison

  Compare the different impacts of a supply-recovery shock and an energy-price shock on exports and demand.

  During the pandemic, China’s relative supply advantage was more visible, while the current energy shock raises global costs and compresses real income, so share gains face a smaller total global trade volume.

• Scenario estimationOffsetting demand drag via export-share gains

  Estimate the additional export-share gain needed to hold final demand stable and compare it with a realistic achievable range.

  The report estimates that maintaining pre-shock final-demand levels may require roughly an additional 0.9 percentage points of export-share gain; the realistic achievable range is estimated at about 0.3 to 0.9 percentage points.

Asset mapping & comparison

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

• China's overall exports

  Macro-impacted asset

  Strengths

  A complete supply chain and large manufacturing scale give cost and delivery advantages in some structurally demanding sectors.

  Weaknesses

  The total global demand pool may decline, and higher imported energy costs would weaken the contribution to real income.

  Comparison

  Unlike the pandemic period, this episode is not a broad share-led expansion driven by China’s earlier supply recovery, but rather selective gains concentrated in green technology and capital goods.

  Risks

  If global trade volume slows materially, share gains may not translate into sufficient export growth.

• “new trio”: new energy vehicles, photovoltaics, batteries

  Primary beneficiary vector

  Strengths

  Supported by demands for energy security, electrification, and supply-chain resilience, China has scale, cost, and supply-chain depth.

  Weaknesses

  Some segments still face excess capacity and price pressure; export price recovery is not uniform.

  Comparison

  More likely than traditional export sectors to realize share gains in this cycle, it is the clearest selective beneficiary segment in the report.

  Risks

  Overseas demand pullback, trade frictions, or intensified price competition may limit margin improvement.

• Energy and refining-related chain

  Channel of cost transmission

  Strengths

  A relatively more balanced energy structure and oil inventories can provide some relative buffer.

  Weaknesses

  As a net energy importer, China faces higher input costs as oil prices rise, squeezing refining throughput and profits.

  Comparison

  Unlike pandemic-period shifts in demand for imported goods, this energy shock is more unfavorable for income and margins.

  Risks

  Higher energy prices could further suppress midstream and downstream demand and corporate profitability.

• Midstream and downstream manufacturing

  Margin-pressured segment

  Strengths

  Some structurally strong sectors, including higher-tech manufacturing and non-ferrous metals, have shown signs of pricing-power recovery.

  Weaknesses

  Sectors with limited pricing power may be unable to fully pass through energy and fuel cost increases.

  Comparison

  Demand-strong sectors are better positioned than conventional manufacturing groups, while price-bottoming sectors still need demand improvement to validate re-inflation.

  Risks

  If demand is insufficient, rising headline inflation may not translate into corporate margin improvement.

Key data

• Global export share increase for China during the pandemicabout 2 percentage pointsIn 2020, China significantly lifted its share as capacity recovered earlier and absorbed the rotation in global goods demand.
• Potential contribution of the “new trio”about 0.3 percentage pointsIf the strong export growth in the first quarter of 2026 continues through the year, the “new trio” could lift China’s global export market share.
• Share gain needed to stabilize final demandabout 0.9 percentage pointsA rough magnitude required to offset worsening terms of trade and weaker global trade volume.
• Realistically achievable share gain rangeabout 0.3 to 0.9 percentage pointsThe low-end case assumes only the “new trio” benefits significantly; the high-end case assumes broader share gains, though at a discount versus the pandemic, from China’s relative energy-structure advantage.
• China’s net energy import gapabout 1.8% of GDP in 2025Rising energy prices can worsen terms of trade and compress real income.
• Green export growth55% growth in January-February 2026, 26% in 2025Reflects structural demand support for green exports in the current environment.

Impact & implications

From a macro perspective, higher export shares can cushion external shocks, but they are unlikely to fully offset weaker global demand and deteriorating terms of trade. On prices, oil shocks can lift headline inflation such as PPI and CPI and help stabilize inflation expectations; on margins, the impact is more complex, as midstream and downstream industries may be pressured by higher energy and refined oil prices. Sector-wise, areas such as new energy vehicles, photovoltaics, and batteries, which previously faced capacity pressure, may receive temporary relief from stronger global structural demand.

Risks

• Global demand may contract as energy prices rise, reducing the total export market.
• As China is a net energy importer, worsening terms of trade may weaken real income and growth contribution.
• Input costs for midstream and downstream industries may rise while pricing power remains limited, compressing margins.
• Export-share gains are concentrated in a few green-technology sectors and may not spread widely enough.
• Geopolitical conflict, trade policy, and offshore demand volatility may alter the export growth path.

What to watch

• Whether the “new trio” export growth in the months after 2026 Q1 remains as strong as Q1.
• Whether China’s global export market share reaches the scenario range of about 0.3 to 0.9 percentage points.
• How oil prices and energy import costs affect terms of trade, refining capacity utilization, and midstream/downstream margins.
• Whether export prices for solar cells, new energy vehicles, and lithium batteries continue to stabilize or rebound.
• Whether PPI, CPI, industrial profits, and manufacturing investment show further weakening of deflationary pressure.