China’s export growth slowed sharply in March as the ongoing Iran conflict disrupted global trade flows, raising energy and transport costs and weakening overseas demand for Chinese goods.

New customs figures showed China’s exports rose by only 2.5% in March — the slowest pace in five months — down sharply from the 21.8% growth recorded in January and February. The result was also well below market expectations, signalling mounting pressure on the country’s export-led economy.

Analysts say the conflict has increased uncertainty across major markets, reducing purchasing demand and shrinking China’s trade surplus. March’s surplus fell to $51.13 billion, far lower than forecasts, while imports jumped 27.8%, adding strain to the trade balance.

Economists note that China’s dependence on manufacturing exports leaves it exposed to global shocks, especially as higher oil and shipping costs raise production expenses. As one of the world’s largest energy importers, China is particularly vulnerable to disruptions tied to Middle East instability involving Iran.

Earlier in the year, strong international demand for AI-related electronics had boosted export performance, but rising costs and weaker global consumer demand are now clouding that momentum. Sectors such as semiconductors and green technology may still provide support, though overall growth is expected to slow.

Despite the weaker March figures, analysts believe China’s economy could remain resilient in the short term, with full-year growth projected at around 4.6%, slightly below last year’s 5.0% expansion.