China's trade hit by Hormuz shock

China’s trade with Iran and the Gulf fell sharply in March after the Strait of Hormuz crisis choked one of Asia’s main energy routes. (scmp.com) The Strait of Hormuz carries roughly a quarter of global seaborne crude oil and one-fifth of liquefied natural gas shipments, and nearly 90 per cent of Asia’s crude passes through it. The World Trade Organization’s tracker showed outbound crude, liquefied natural gas and fertilizer shipments from the Gulf dropping to almost zero after Iran’s closure announcement on March 2, 2026. (scmp.com; wto.org) Chinese customs data showed higher March shipments from Russia, Malaysia and Indonesia, but those barrels only partly made up for lost volumes from Iran and Gulf suppliers. South China Morning Post reported that the rerouting softened the hit without replacing the shortfall. (scmp.com) Russia remained China’s biggest crude supplier in March at 10.07 million tons, or about 2.37 million barrels a day, up 14 per cent from a year earlier, while Saudi Arabia shipped 5.86 million tons, according to customs figures reported on April 19. (boereport.com) The shock is spreading beyond oil cargoes. The World Trade Organization warned that if crude oil and liquefied natural gas prices stay high through 2026, global growth would fall by 0.3 percentage points and merchandise trade would decline by 0.5 percentage points. (scmp.com) International forecasts are already moving lower. The International Monetary Fund now sees growth in emerging and developing Asia at 4.9 per cent in 2026, down from 5.5 per cent in 2025, and the Asian Development Bank expects developing Asia and the Pacific to slow to 5.1 per cent in 2026 from 5.4 per cent last year. (scmp.com) China still posted 5 per cent first-quarter growth, and Finance Minister Lan Foan said last week that the economy would remain an engine for global growth. But the World Bank now expects East Asia and Pacific growth at 4.2 per cent in 2026, down from 5 per cent last year, with the Middle East energy shock adding to trade barriers and policy uncertainty. (scmp.com) Manufacturing economies across Asia depend on imported fuel, raw materials and intermediate goods, and the region accounts for 32 per cent of global trade. That leaves China, India, Japan and South Korea exposed when Gulf shipping slows and replacement cargoes have to travel farther or cost more. (scmp.com; scmp.com) Even if a ceasefire holds, Oxford Economics told South China Morning Post that shipping through Hormuz may recover only gradually, reaching about 50 per cent of normal levels in May and June before returning to full capacity later. For China, that means March’s trade drop may look less like a one-month shock than the start of a longer scramble for energy and freight capacity. (scmp.com)