China's export market has slowed as the war on Iran and disruptions in the Strait of Hormuz reduce orders from the Middle East [1, 2].
This downturn threatens the livelihoods of thousands of small-scale traders and traditional manufacturers who rely on stable shipping lanes to reach Gulf markets. While high-tech sectors have shown resilience, the crisis creates a volatile environment for the goods-heavy economy of Zhejiang province.
Exporters in Yiwu City, a global hub for small commodities, are among the hardest hit. These traders have seen a decline in demand as the conflict disrupts regional logistics and creates raw-material bottlenecks [1, 3]. The instability has also impacted energy security. China's oil imports in April 2024 fell to the lowest level in almost four years [4].
Economic data from early 2024 presents a mixed picture of the national economy. Some reports indicate that strong exports of electrical and mechanical products supercharged the economy in the first three months of the year [5]. However, other data shows that March exports slowed sharply and missed forecasts due to the conflict [1].
Despite the slowdown in traditional goods, some sectors experienced growth. China's imports surged 27.8% in March 2024 [1]. The government has also taken steps to protect domestic supplies of critical chemicals. China announced a ban on sulfuric acid exports starting May 2024 to mitigate supply hits caused by the war [6].
The combination of energy price volatility and shipping delays continues to pressure the margins of manufacturers. The reliance on the Strait of Hormuz remains a critical vulnerability for the trade flow between East Asia and the Middle East [1, 3].
“China's oil imports in April 2024 fell to the lowest level in almost four years.”
The divergence between China's high-tech export growth and the struggle of traditional manufacturers highlights a structural shift in the economy. While AI-driven and mechanical goods provide a buffer, the vulnerability of Yiwu-style trade to geopolitical shocks in the Middle East underscores the risk of relying on a single maritime chokepoint for regional commerce.
