While the outcome of the conflict in Iran remains uncertain, China, a key ally in the region, is not in the clear. Remaining faithful to its stance, Beijing calls for an end to the fighting and warns of the risk of regional escalation. Despite the destabilization of Iran and the blockade of the Strait of Hormuz complicating its energy supply, the country has sufficient reserves to last several weeks. The reason behind China’s restraint lies in the symbolic victories and commercial gains that Xi Jinping could achieve during his meeting with Donald Trump at the end of the month, according to Alicia Garcia Herrero, Chief Economist at Natixis in Hong Kong.
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China’s involvement in the Iran conflict is crucial due to its energy supply and diplomatic implications.
The vulnerability of China’s energy supply is highlighted by its dependence on Iranian oil, constituting a significant portion of its imports. The country purchases this oil at substantially discounted prices compared to the global market rate, giving it a competitive advantage in energy procurement.
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Alicia Garcia Herrero also points out that China has invested $40 billion in the China-Pakistan corridor and the development of the Pakistani port of Gwadar to ensure its future energy security. However, these plans are currently at risk due to the Iran conflict.
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The $40 billion investment in the China-Pakistan corridor and the Gwadar port is mentioned, highlighting China’s strategic efforts in the region.
If the regime of the mullahs in Iran were to fall, it could potentially challenge Beijing’s geostrategic policy. This is because Iran plays a significant role in China’s diplomatic prestige and rivalry with the United States, particularly in the Middle East. Without a stable Iran, China loses a major geopolitical lever.
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The potential implications of Iran’s instability on China’s geopolitical standing are under scrutiny.
China’s energy vulnerability is a concern in the event of a military operation involving Taiwan, as a prolonged war would require uninterrupted energy flows that are currently compromised due to Iran’s destabilization. Beijing is also aware that a conflict with Taiwan could expose its oil imports to American restrictions, as 90% of them pass through the sea.
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The discussion on China’s energy vulnerabilities extends to potential military operations involving Taiwan and the challenges they pose.
As the meeting between Donald Trump and Xi Jinping in Beijing at the end of the month approaches, it is interesting to note China’s cautious approach amid the Iran intervention. China lacks significant military capabilities beyond its borders and prefers to maintain its commercial relationship with the United States, condemning the situation verbally without direct involvement.
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The upcoming summit between Trump and Xi Jinping will be focused on trade and Taiwan-related discussions, with little expectation for major breakthroughs.
The Trump-Xi summit scheduled for March 31 to April 2 could be tense but pragmatic. Trump will seek commercial concessions and commitments on Taiwan, while Xi Jinping will aim to stabilize trade and prevent escalation. Few breakthroughs are anticipated, but a display of dialogue to calm markets is expected. China is unlikely to concede on key strategic issues.
