Chinese economy shows resilience amid Middle East turmoil

1. Chinese Economy Resilient to Middle East Troubles: The Chinese economy has shown remarkable resilience, with the manufacturing and service sectors rebounding simultaneously. This is the first month of the year where exports have grown, driven by sustained demand for artificial intelligence (AI) products. Additionally, the Chinese stock market has outperformed many other major markets since late February 2026, marked by the start of the Israeli-Iranian conflict.

2. FAO: Middle East Conflict Drives Up Global Food Prices: According to a report by the Food and Agriculture Organization of the United Nations on April 3, the food price index, tracking cereals, sugar, meat, dairy products, and vegetable oils, averaged 128.5 points in March 2026, a 3-point increase (equivalent to 2.4%) from February 2026. This is the second consecutive month of increase after a five-month decline starting in February 2026.

3. Gulf Region Promotes New Energy Corridor to the Mediterranean: Gulf states are considering extending oil pipelines beyond the Strait of Hormuz to reduce their dependence on this vital maritime route for exports. One of the main options being studied is the construction of an oil pipeline connecting the Arabian Peninsula to the Mediterranean via the Israeli port of Haifa. This project is seen as a strategic step to restructure the regional energy network, particularly amid increasing geopolitical tensions.

4. Iran Collects Passage Fees in RMB for Transit in the Strait of Hormuz: Chinese cross-border payment service companies’ stocks have surged following the announcement by the Chinese Ministry of Commerce of using RMB for transit fees in the Strait of Hormuz. Specifically, a notice on the ministry’s website, citing a recent report from Lloyd’s List, indicates that ships pay Iran a passage fee of $2 million for this crucial energy transport route, and these fees can be fully paid in RMB.

Additional Updates

5. Japan Shifts Rice Policy Toward Demand-Driven Production: On April 3, the Japanese government announced a shift in its policy to promote rice production based on actual demand, while implementing new measures to prevent shortages.

6. Microsoft Invests $10 Billion in AI in Japan: On April 3, Microsoft President Brad Smith announced a $10 billion investment in Japan over four years to enhance AI and cloud computing infrastructure.

7. Italy Postpones Coal Power Plant Closure: Italy delays the definitive closure of its coal power plants until 2038, 13 years longer than initially planned, as part of a new energy law recently adopted.

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