*[Global Morning Briefing] summarizes global news from The Seoul Economic Daily.*
Trump Counter-Blockades Strait, Mulls Airstrikes as Iran Threatens to Seal Red Sea
Tensions between the United States and Iran have escalated rapidly following the collapse of nuclear negotiations, putting the entire Middle East energy transit route at risk. As President Donald Trump is reportedly considering resuming limited military strikes against Iran following his counter-blockade of the Strait of Hormuz, Iran has responded by threatening to blockade the Bab el-Mandeb Strait in the Red Sea.
According to the Wall Street Journal, Trump is reviewing limited airstrike options targeting Iranian desalination plants and power stations following the negotiation breakdown, though he reportedly does not want full-scale war. U.S. Central Command plans to blockade vessels entering and exiting Iranian ports while allowing passage for neighboring Arab nations, precisely targeting Iran's oil exports. Approximately 2,000 vessels currently anchored in the Strait of Hormuz are effectively under complete blockade between the two nations.
Deep divisions remain on negotiation issues. The U.S. is demanding uranium enrichment suspension, facility dismantlement, and an end to proxy force support, while Iran has flatly rejected conditions including a 20-year waiver of enrichment rights. However, neither side has officially declared negotiations over, leading some analysts to view this as brinkmanship tactics to maximize negotiating leverage.
The situation is affecting neighboring countries as well. China, heavily dependent on Iranian crude oil, may pressure the U.S. to lift the blockade at next month's scheduled U.S.-China talks, with analysts suggesting Beijing could play its critical minerals card if necessary. Japan is considering interest rate hikes to address inflation from rising energy prices, with markets seeing approximately 60% probability of the Bank of Japan raising rates later this month.
Iran Strikes Hit Chinese Investments Worth 402 Trillion Won
China, which has invested $270 billion (approximately 402 trillion won) in the Middle East, faces complex calculations between short-term losses and long-term opportunities as it takes direct hits from the Iran conflict. Three sites where China has invested funds—Dubai International Airport, Qatar's Ras Laffan gas facilities, and Oman's Duqm Port—have suffered damage from Iranian airstrikes, with an additional 12 locations exposed to high-risk zones.
Since the pandemic, China has shifted its Belt and Road investment focus from Africa to the Middle East. Between 2018 and 2023, China increased its Middle East lending and aid share by 50% while reducing Africa's by 50%, with Middle East donations reaching approximately 2.3 times the U.S. level during the same period. This reflects China's high assessment of Gulf states' abundant energy resources and potential for green energy and tourism-focused economic transitions.
The damage extends beyond infrastructure. Before the conflict, approximately 370,000 Chinese nationals resided in the UAE alone, and despite more than 10,000 evacuations, many remain in war zones due to relocation costs. Projects currently at risk total approximately 7 trillion won.
However, experts analyze that China could gain indirect benefits from this turmoil in the long term. As the U.S. loses credibility in the Middle East, opportunities for economic expansion are opening up, including Iran's indication that it would accept some Strait of Hormuz transit fees in yuan. Experts predict China will likely seek to take the lead in Middle East reconstruction after the storm passes.
AI Glasses and Robots Replace Luxury Goods in China
China is positioning artificial intelligence technology as a core driver of consumer stimulus, with smart glasses and care robots emerging as the main attractions at the Hainan International Consumer Products Expo, displacing luxury goods. This year's expo, the largest ever with 3,400 companies from 60 countries participating, clearly demonstrated China's changed consumption strategy by dedicating Exhibition Hall No. 1—previously occupied by luxury products—entirely to technology goods.
This year's exhibition featured products ready for immediate everyday use rather than technology demonstrations. Care robots that measure health indicators like blood pressure in real time and companion robots that respond to touch drew attention as products targeting the era of low birth rates and aging populations. AI glasses companies also set up dedicated booths and rental services, engaging in fierce promotional competition.
Government policy support is also prominent. At this year's Two Sessions, 250 billion yuan (approximately 54 trillion won) was allocated for trade-in subsidies, with smart glasses included as eligible products, providing up to 500 yuan for products priced under 6,000 yuan. Major e-commerce platforms including JD.com and Taobao have posted subsidy banners and begun sales, with monthly sales steadily increasing since January.
Hainan Province, host of the expo, dramatically expanded duty-free items from 1,900 to 6,600 following implementation of its "customs closure" policy designating the entire island as a special customs zone last December. As a result, duty-free shopping jumped 46.8% year-on-year in the month following the closure, solidifying Hainan's role as a strategic hub for domestic demand stimulation and foreign investment attraction.
'Europe's Trump' Exits After 16 Years; Successor Declares 'Return to EU, NATO'
Viktor Orbán, who led Hungary for 16 years as "Europe's Trump," is stepping down from power following a crushing election defeat, signaling significant changes in the European political landscape. The opposition Tisza Party secured 138 of 199 total seats, surpassing the 133 seats needed for constitutional amendments, while Orbán's Fidesz party managed only 55 seats in a complete defeat.
Tisza Party leader Péter Magyar declared immediately after the victory that "Hungary will become a strong ally of the European Union and NATO," clearly breaking from the Orbán era. Orbán served as the vanguard of far-right populism in Europe based on his close relationships with Trump and Putin, but a scandal involving leaked recordings of Hungary's foreign minister related to Russia, along with deepening corruption and economic hardship, accelerated public disillusionment.
The regime change is expected to bring major shifts in Hungary's foreign relations. Magyar has consistently advocated a pro-EU, pro-NATO stance while maintaining a critical position toward Russia. The EU has frozen Hungarian funding for years citing concerns over judicial independence and rule of law, and markets expect the regime change could trigger the release of frozen funds and potentially open the possibility of euro adoption in the medium to long term.
This result also aligns with the broader retreat of far-right populism observed across Europe. Given that voters chose change despite open support for Orbán from Trump and Putin, Hungary's election appears destined to be recorded as a new turning point in European politics.
