Issue 481 - 27.06.2025
11.07.2025

Stakes are high for China in war against Iran

Despite Chinese leader Xi Jinping's plans to supplant the U.S.-led international order, Beijing has been a bit player in the major conflicts consuming the globe in recent years. China's peace plan for Ukraine and Middle East diplomacy in the wake of Hamas' October 7 attack have had no impact on resolving either of those conflicts. Following the U.S. strikes on Iran's nuclear facilities over the weekend and Iran’s retaliation against an American base in Qatar on Monday, China's influence and interests will be tested in ways that pale in comparison to the wars in Ukraine and Gaza.

While those two conflicts had modest strategic import for China, the war in Iran is a direct threat to vital Chinese interests. But it also gives Beijing opportunities, particularly in relation to its strategic rivalry with the United States.

Even before the United States entered the fray over the weekend, Chinese officials had been warily watching the Israel-Iran war because China has three key interests at stake.

Energy-hungry China gets roughly half of its imported oil from the Middle East. That oil transits through the Strait of Hormuz, which Iran could cut off or mine if the conflict escalates. Six of China's top 10 official sources of oil are in the Persian Gulf region — and that doesn't include Iran, which sends over 90 percent of its exported oil to China. To evade U.S. sanctions, China acquires Iranian oil — at a heavy discount — through transshipment from countries like Malaysia.

While Israel has yet to strike Iranian oil or gas facilities, these could be next on the target list if the conflict escalates further. If Israel does intend to pursue regime change, it may look to cut Iran's access to oil funds. Even if that doesn't happen, regional instability could threaten China's energy imports from the Arab Gulf states, which may be forced to slow or halt production if a regional conflagration ignites. Iran’s attack on the U.S. Al Udeid Air Base in Qatar on Monday opens more uncertainty about what’s next.

China's manufacturers, the backbone of the country's economy, rely heavily on natural gas and crude oil. A spike in oil prices or a disruption of the flow of oil would thus have significant consequences for Beijing's lagging economy.

On Sunday, Iran's parliament backed a plan to shut down the strait in retaliation for the U.S. bombing. In response, U.S. Secretary of State Marco Rubio called on Beijing to pressure Iran to leave the strait open. "I encourage the Chinese government in Beijing to call them about that because they heavily depend on the Straits of Hormuz for their oil," Rubio said.

Oil isn't the only reason China wants peace in the Middle East. All 22 countries in the Arab League are partners in the Belt and Road Initiative, China's signature connectivity and infrastructure project. Beijing has signed hundreds of economic deals with these countries and continues to deepen ties with the region's most wealthy and powerful states, namely Saudi Arabia and the United Arab Emirates. China is the largest trading partner for many countries in the region, and Arab-China trade exceeded $400 billion in 2024, according to Arab and Chinese officials.

"Beijing wants a peaceful and stable Middle East because it has little if anything to gain materially from continued conflict and much to lose economically," Andrew Scobell, a senior China scholar at the U.S. Institute of Peace, wrote in 2023. In short, war in the Middle East is bad for China's bottom line.

In recent years, some observers have suggested that China, Russia, Iran and North Korea were developing into an anti-Western "Axis of Authoritarianism." While that assertion may be overblown — neither China nor Russia has indicated any willingness to defend Iran against U.S. or Israeli attacks — Beijing won't be happy to see the regime in Tehran fall if that eventually happens. Tehran is an important node in China's effort to flout the U.S.-led international order and a member of several groups, like BRICS and the Shanghai Cooperation Organization, that Beijing touts as part of an emerging alternative global security architecture.

While China prizes its economic interests first and foremost, losing a partner in its bid to build an alternative security order is no small loss.

Although China faces severe and potentially worsening threats to its interests, Xi and the Chinese Communist Party leadership may see some strategic openings in the days ahead.

First, the United States may be taking its eye off the ball in the Indo-Pacific. Washington has significant military assets in Asia to deter Chinese threats against U.S. allies and partners in the region, like Japan, the Philippines and Taiwan. But since the war in Gaza began, the U.S. military has re-located resources and attention from the Indo-Pacific to the Middle East.

Amid the United States's bombing of Yemen's Houthis this spring, the United States re-located missile defense batteries, a Terminal High Altitude Area Defense system, and the USS Carl Vinson aircraft carrier from Asia to the Middle East. Early last week, another U.S. aircraft carrier, the USS Nimitz, left the South China Sea for the Middle East.

China has already exploited the United States' shifting attention with provocative actions. Just days after Israel's initial attack on Iran, Beijing said it conducted sea and air patrols shadowing a joint Japan-Philippines naval exercise.

Of course, this was before the United States became directly engaged in the Iran war this weekend. With even more strategic attention and U.S. military resources focused on the Middle East, there is space for China to engage in even further aggressive actions in places like the South China Sea and Taiwan.

While acknowledging that a “destroyed” Iran is “detrimental to China’s geopolitical interests,” Tian Wenlin, the director of the Institute of Middle East Studies at Renmin University of China, said “this conflict may cause the United States to be more deeply involved in the Middle East, which may lead to a relatively longer period of strategic opportunities for China.”

Second, China will use the Iran war — like the wars in Gaza and Ukraine — to make the case that the U.S.-led international order is unstable and unfair for everyone but U.S. allies. China has been making this argument for years but has ramped it up since Xi’s 2022 launch of the Global Security Initiative (GSI), one of Beijing's central vehicles to promote its alternative to the U.S.-led order. This playbook has gone into overdrive since the Gaza war broke out, with China accusing the United States of hypocrisy over its positions on the wars in Gaza and Ukraine. China’s bid to undermine U.S. leadership has benefitted from this accusation because it has resonated with many Global South countries.

Despite all that's at stake for China, it's unlikely to take any serious risks to resolve the Iran war.

In their comments since the Iran war began, Chinese officials have deployed key GSI principles, like sovereignty and "common security," when discussing the conflict and how to resolve it. With the United States focused on the fight against Iran, China will surely criticize U.S. actions and its leadership of the international system while pushing China's alternative vision.

Despite all that's at stake for China, it's unlikely to take any serious risks to resolve the Iran war. China's influence in the Middle East seemed to be ascendant in March 2023 after it brokered a rapprochement between longtime foes Iran and Saudi Arabia. (Although some observers have questioned how vital China's role was). But the limits of China's influence were put in stark relief less than a year later with the outbreak of the Gaza war. Those limits will likely be further underscored in the days and weeks ahead, especially if the Iran war devolves into a regional conflagration.  

By Adam Gallagher for the United States Peace Institute

China, Pacific

11.07.2025

China’s January-May ODI higher on BRI support

China's total nonfinancial outbound direct investment rose 2.3 percent year-on-year to $61.6 billion in the first five months, underscoring the nation's sustained efforts to deepen international cooperation, said the Ministry of Commerce on Thursday.

In the meantime, the country's nonfinancial ODI in countries and regions involved in the Belt and Road...

China's total nonfinancial outbound direct investment rose 2.3 percent year-on-year to $61.6 billion in the first five months, underscoring the nation's sustained efforts to deepen international cooperation, said the Ministry of Commerce on Thursday.

In the meantime, the country's nonfinancial ODI in countries and regions involved in the Belt and Road...

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China takes financial measures to support consumption

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Such efforts are aimed at meeting the diverse financing needs of both consumers and business entities,...

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Such efforts are aimed at meeting the diverse financing needs of both consumers and business entities,...

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The private sector, including private enterprises and individual businesses, accounted for 96.76 percent of the total business entities in China as of the end of May, the State...

The number of China's private sector entities reached 185 million by the end of May, increasing 2.3 percent year-on-year, official data showed Friday.

The private sector, including private enterprises and individual businesses, accounted for 96.76 percent of the total business entities in China as of the end of May, the State...

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Trading on Chinese stock exchanges ends with decline in quotations

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The indicator Shenzhen component, which is an indicator of business activity...

Trading on Chinese stock exchanges ended today with a decline in quotations. The Shanghai Composite index, reflecting the situation on the Shanghai Stock Exchange, decreased by 0.22 percent to 3,448.45 points compared to the results of the previous trading day.

The indicator Shenzhen component, which is an indicator of business activity...

Eurasia

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Russia to boost exports of China’s favorite Russian crude in July

Russia is set to raise the shipments of the ESPO Blend crude from its Far East port of Kozmino in July, after lower exports this month due to maintenance, trading sources told Reuters on Wednesday.

ESPO loadings from Kozmino are expected at 4 million tons, or about 970,000 barrels per...

Russia is set to raise the shipments of the ESPO Blend crude from its Far East port of Kozmino in July, after lower exports this month due to maintenance, trading sources told Reuters on Wednesday.

ESPO loadings from Kozmino are expected at 4 million tons, or about 970,000 barrels per day (bpd) in...

11.07.2025

China, Armenia pledge closer partnership

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Wang reiterated China's foreign policy as characterized by forging partnerships rather than alliances and engaging in dialogue instead of confrontation, pledging to work with Armenia to...

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Chinese investor builds corn deep processing plant in Kazakhstan

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According to the information provided, Fufeng Group has agreed to build a plant for deep processing of corn. At the first stage, investments will reach $350 million. The total cost of the project...

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According to the information provided, Fufeng Group has agreed to build a plant for deep processing of corn. At the first stage, investments will reach $350 million. The total cost of the project...

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Pragmatism on China investment key to Europe’s economic recovery

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DWS Chief Executive Stefan Hoops said that Chinese investors, for instance, frequently encounter excessive skepticism. "In many cases we...

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DWS Chief Executive Stefan Hoops said that Chinese investors, for instance, frequently encounter excessive skepticism. "In many cases we...

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Airbus delivered its first commercial aircraft to China, a wide-body...

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The facility, in collaboration with Pertamina New and Renewable Energy (Pertamina NRE) — a subsidiary of Indonesian state-owned energy company Pertamina...

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The facility, in collaboration with Pertamina New and Renewable Energy (Pertamina NRE) — a subsidiary of Indonesian state-owned energy company Pertamina...

Africa, Americas

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The two sides signed 176 projects at the fourth China-Africa Economic and Trade...

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The two sides signed 176 projects at the fourth China-Africa Economic and Trade...

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Agriculture development with the support of Chinese technologies, innovations, expertise and capital will benefit local communities, economies and ecosystems, said experts attending the inaugural Africa-China Forum...

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Agriculture development with the support of Chinese technologies, innovations, expertise and capital will benefit local communities, economies and ecosystems, said experts attending the inaugural Africa-China Forum...

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The route was jointly announced by Guangzhou Port Group and Hede Shipping of Hebei Port Group on...

A premium shipping route from South China to the West Coast of the United States, the first direct point-to-point route of its kind, is expected to open in July, according to the route's operators.

The route was jointly announced by Guangzhou Port Group and Hede Shipping of Hebei Port Group on...