China is not yet feeling the effects of the ongoing hostilities in the Middle East, but it has noticed the ripples and is trying to understand what this will mean in the long term, not only for its investments in the Middle East, but also for overall investments, writes the BBC.
In the short term, China has enough oil reserves to last for several months, after which the country can turn to Russia for help. In early March, thousands of Communist Party members met in Beijing to discuss further action at a time when the world’s second-largest economy is struggling with low consumption, a prolonged housing crisis and huge domestic debt. On the 5th of March, China lowered its annual economic growth target to its lowest level since 1991, even as Beijing continues to rapidly develop high-tech and renewable energy industries.
China may have been hoping for exports as a way out of its economic woes, but it has spent the past year engaged in a trade war with the United States and now faces chaos in the Middle East, which underpins both China’s vast logistics routes and its energy needs.
The longer the war drags on, the more painful it will be for China, especially if shipping through the Strait of Hormuz is not restored. Philip Shetler-Jones, a fellow at the Royal United Services Institute, said that prolonged unrest and insecurity in the Middle East would cause disruptions in other regions important to China. The expert stressed that African economies have benefited from significant and sustained capital flows from the Persian Gulf, and if that investment dries up, there is a risk of widespread instability that would affect Chinese interests.
So
a prolonged war would also affect Chinese investments and markets outside the Middle East,
and like many other countries, China is worried about the new wave of instability. Kerry Brown, a professor at King’s College London, said China is probably thinking the same thing as others: what’s the plan? It’s not like the Americans went to war without a plan. But the professor added that – like others – China is thinking that the US has unthinkably started a war without any further plan, and is thinking: “Right, we don’t want to get dragged into this like we don’t want to get dragged into anything else, but we also need to do something.”
Many in the West have considered Iran to be an ally of China. The two countries have been friendly. The last foreign trip of the late Iranian Supreme Leader Ali Khamenei was to Beijing in 1989, where he was photographed standing at the Great Wall of China. Cooperation between the countries grew closer when Chinese President Xi Jinping visited Tehran in 2016, and in 2021, Iran and China signed a 25-year cooperation agreement. Beijing promised to invest 400 billion dollars in Iran, in exchange for which Tehran would ensure the flow of oil. Analysts believe that only a fraction of the agreed amount reached Iran, but China received the oil. In 2025, China imported 1.38 million barrels of crude oil from Iran, accounting for about 12% of China’s total imports. Some of the crude oil is believed to have been declared as originating in Malaysia to disguise its true origin.
A Columbia University research center has released a report saying that more than 46 million barrels of Iranian oil are stored in floating storage facilities in Asia, and that even more oil is in bonded warehouses that have not yet been cleared. The countries are also believed to be trading arms with each other. China denies selling anti-ship cruise missiles to Iran, but US intelligence agencies have accused China of supporting Tehran’s ballistic missile program by training engineers and supplying components.
Human rights organizations have suggested that
facial recognition and video surveillance technology provided by Beijing has helped the Iranian regime’s brutal crackdown
on civilian protests and critics of the regime.
It might sound like Beijing and Tehran really do have friendly relations. China and Iran, along with Russia and North Korea, do want to disrupt the US-led world order, but overall it is a business relationship. Professor Brown pointed out that there is no real ideological or cultural reason why China would want to be “friends” with Iran. He pointed out that China’s “divide and rule” policy has been well served by the US’s view of Iran as an irritant, and that Beijing’s relationship with Tehran has more negative than positive reasons. While such a tenuous relationship has worked for a while, it is not deep.
China does not see its alliances in the same way that the West sees its own. It does not sign defense treaties or rush to the aid of “allies,” and Beijing tries to avoid getting involved in conflicts. However, this does not mean that China is not concerned about what is happening in the Middle East.
China has expressed predictable and muted condemnation and called for a ceasefire. Chinese Foreign Minister Wang Yi said the US and Israeli attacks on Iran were unacceptable, and even more unacceptable was the brazen assassination of the leader of a sovereign country and the call for regime change. The reality is that US actions in Venezuela and now Iran have exposed the limits of their cooperation with China. In both cases, Beijing has stood by as an observer, unable to help its partners. Shetler-Jones pointed out that China is trying to present itself as a responsible counterweight to the US, but the US has clearly demonstrated what it means to be a superpower.
Beijing is not a power of the same level, and it cannot protect its “friends,” even if it wanted to.
To distract attention from what Beijing is unable to do, Xi will continue to position himself as a stable and predictable leader – a counterweight to US President Donald Trump. Steve Tsang, director of the SOAS China Institute, said China’s argument would no doubt be that Trump had once again exposed the extent of Western hypocrisy. He added that the disruptions to energy and air traffic caused by the conflict would have a greater economic impact on the global south than on the west.
Beijing could see an opportunity to act as a mediator. China’s foreign minister has already spoken to his counterparts in Oman and France, and Beijing has announced the dispatch of a special envoy to the Middle East.
China is currently reviewing its actions very carefully, particularly in light of Trump’s planned visit in March. None of China’s criticism of US and Israeli strikes on Iran has been directly directed at Trump, which could lend some credence to the visit. Some have suggested the visit could be cancelled, but there is no sign of that at the moment.
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