TD Securities expects China’s March exports to ease after strong results in January and February. Rising input costs may slow production and put pressure on export growth in the near term.
Imports could be higher than expected if authorities increase stockpiling of key goods and commodities amid the US–Iran conflict. The same cost pressures may affect firms’ output plans even if industrial production holds steady in March.
Q1 Growth Outlook And Consumer Demand
Retail sales may be weaker if consumers brought spending forward during the CNY holidays and due to the early rollout of consumer trade-in programme subsidies. TD Securities projects Q1 GDP growth of 4.8% year on year, supported by exports and manufacturing earlier in the quarter.
The article was produced using an AI tool and reviewed by an editor.
We remember how the geopolitical conflicts of 2025 drove China to stockpile commodities, creating a notable spike in its import figures. With current shipping lane tensions rising in the Red Sea, we are watching for a similar pattern of strategic buying to emerge in the coming weeks. China’s latest Caixin Manufacturing PMI for March 2026 held just above expansion at 50.9, but worryingly, the input price sub-index hit an 18-month high.
This risk of accelerated stockpiling suggests a clear upside for key industrial and energy commodities. We have already seen Brent crude futures climb nearly 10% in the last month to over $92 a barrel, and this could be an early indicator of larger state-backed purchases. Traders should consider long positions in crude oil or copper futures, or use call options to define risk while capturing potential upside from this import-driven demand.
Positioning For Costs Currency And Volatility
Conversely, sustained high input costs will eventually squeeze corporate margins and could dampen export growth, much like the dynamic we observed in the second quarter of 2025. This points toward hedging or taking bearish positions on Chinese equity indices that are heavily weighted toward manufacturing and export-oriented firms. Buying put options on an ETF tracking the FTSE China A50 Index provides a direct way to position for a potential slowdown.
This environment creates a divergence that puts downward pressure on the Chinese yuan, as commodity import bills rise while export revenues face headwinds. We see value in positioning for a higher USD/CNH exchange rate through instruments like call spreads, which can profit from a gradual depreciation of the yuan. The heightened uncertainty also justifies considering strategies that benefit from increased market volatility, such as buying straddles on specific commodity-linked stocks.
