The People's Bank of China issued a statement following the regular meeting of the Monetary Policy Committee for the first quarter of 2026, noting increased vigilance due to external uncertainties. Currently, the central bank's monetary policy is guided by the principle of "maintaining stability," and it is believed that there is no need to cut reserve requirements or interest rates, as demand for financing in the real sector remains weak, and economic recovery largely depends on new driving forces such as mid-range high-tech manufacturing.

The worsening situation in the Middle East is leading to rising energy prices, exacerbating the imbalance between raw material price increases and the stability of end-product prices. However, the situation of supply exceeding demand has not changed. Nevertheless, the key logic that geopolitical conflicts strengthen China's export position remains, and the market expects that exports may repeat the high growth rates observed in 2020-2021.

In the context of ongoing strait blockades, six key global production and supply chains are under threat: there is still a shortage of oil and gas supplies, increasing companies' costs for refined petroleum products and electricity; basic chemical products are experiencing strategic stock shortages; and in the agrochemical and food supply chains, the nitrogen fertilizer sector is suffering the most.