CITIC Securities: Assessing the Impact of US-Iran Conflict on the Chinese Economy

CITIC Securities research report pointed out that the intensity of the disturbance caused by the US-Iran conflict exceeded market expectations, and a definite solution has not yet been seen. High oil prices may persist for a longer time. It is expected that China's exports will continue to maintain a relatively high level of prosperity. The US-Iran conflict has both negative impacts on the demand side of exports and structural benefits on the supply side. The rise in traditional energy prices may drive the demand growth for new energy products, and exports of new three types of products are expected to become important drivers. However, in the short term, the temporary closure of the Strait of Hormuz may lead to production cuts or shutdowns for some oil and petrochemical companies, causing a temporary decline in China's exports to Gulf countries. Domestic production and export-related data may show a significant slowdown starting in March, and if the geopolitical situation continues to deteriorate, policy actions may be seen as early as the April political meeting. We expect that although the Producer Price Index may turn positive in March, the People's Bank of China will not tighten monetary policy because of this, but will continue to support the expansion of domestic demand. In terms of macroeconomic operation, strong domestic and foreign demand in January-February 2026 drove production beyond expectations. This week, the market will pay attention to China's economic data for January-February and the Federal Reserve's interest rate meeting. It is recommended to pay attention to the situation in Iran next week.