China’s March trade data showed exports weakening and imports rising, which reduced the trade surplus to a 13‑month low. Seasonal patterns and a high comparison base from last year weighed on exports, while higher energy and raw material prices supported imports.
In US dollar terms, exports rose 2.5% year on year (Bloomberg estimate: 8.6%; February: 39.6%). Imports rose 27.8% year on year (Bloomberg estimate: 13.9%; February: 13.8%).
The trade surplus fell to US$51.13bn from US$90.98bn in February. Import growth was linked to higher global energy and raw material prices tied to the ongoing Middle East conflict.
Imports of semiconductors and computers stayed firm, with steady buying of copper and iron. In volume terms, coal and refined petroleum product imports rose versus March last year, while crude oil and LPG imports fell, linked to Middle East supply disruptions and a shift towards alternative energy.
In 1Q26, exports rose 14.7% year on year and imports rose 22.7%. The cumulative trade surplus was US$264.33bn in 1Q26, compared with US$271.09bn in 1Q25.
The March trade data suggests the Chinese yuan may face headwinds in the coming weeks. The trade surplus, a key source of yuan strength, has hit a 13-month low, and we have already seen the USD/CNH pair test the 7.30 level multiple times in early April. Derivative traders should consider strategies that benefit from a stable or slightly weaker yuan, such as purchasing call options on the USD/CNH.
Higher import costs, driven by geopolitical risk in the Middle East, are a central theme. We’ve seen this reflected directly in the markets, with Brent crude futures holding firmly above $95 per barrel throughout the last month. This sustained price pressure suggests that bullish positions in oil futures or call options on energy ETFs could continue to be profitable.
The continued strong demand for industrial commodities like copper should not be ignored. China’s firm purchases, reflected in the import data, have helped push copper prices on the London Metal Exchange to their highest levels since early 2024. This underlying physical demand provides a strong case for maintaining long positions in base metal futures.
This split between weak exports and strong imports creates uncertainty for the broader equity market. While domestic-focused technology and materials sectors may see support, export-oriented companies could lag, a trend we are already seeing in the 4% fall of the Hang Seng Index this month. This divergence makes strategies that profit from rising market volatility, such as long straddles on the FTSE China A50 index, appear increasingly attractive.
