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Investing.com-- China’s trade balance fell much more than expected in March, hit by an outsized increase in imports amid steadily growing domestic demand for artificial intelligence chips and infrastructure.
Growth in Chinese exports also slowed sharply, missing expectations as the U.S.-Israel war on Iran rattled global shipping activity and demand.
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Trade balance fell to a surplus of $51.13 billion in March, customs data showed on Tuesday. The print was weaker than expectations for a $107.50 billion surplus, and weakened sharply from a $213.62 billion surplus seen in the prior month.
China’s exports grew 2.5% year-on-year in March, missing expectations of 8.3%. The print marked China’s slowest pace of export growth since early-2025.
China’s imports, on the other hand, surged 27.8% in March, blazing past expectations for a 11.1% rise.
Imports were expected to surge after South Korea’s exports– viewed as a bellwether for Chinese demand– rose a stellar 62.4% in March.
South Korea is a major exporter of semiconductors and servers to China, with AI-driven demand in the country seen rapidly picking up in recent months.
The import reading pointed to some resilience in domestic demand, which could in turn help spur economic growth in the coming quarters. Chinese first-quarter gross domestic product data is due later this week, and is expected to show growth picking up marginally from the prior quarter.
China’s key economic driver-- its massive export business-- was impacted by disruptions stemming from the Iran war, as global shipping rates rose sharply.
Capital Economics analysts said the soft export print largely reflected "seasonal distortions," noting that exports still grew substantially in the first quarter of 2026.
They noted that electric vehicles and semiconductors were two bright spots in Chinese exports, with the latter expected to keep rising further amid a global shortage in memory chips due to outsized demand in the AI sector.