China weathering Iran war with minimal damage

Various observers are emphasizing that the US-Israeli war against Iran is either hurting or helping China.

Some argue that “China has a lot to lose,” that the war is “unsettling China and its ambitions,” or that “Xi Jinping’s geopolitical chessboard is starting to collapse.”  Others contend that the war “could help China,” that “China gains [an] edge from Trump’s war,” or that “Beijing may emerge as the quiet winner.”

This is a complicated question involving several factors, some favorable to China’s global agenda and some unfavorable. A proper assessment finds that the war is a net negative for China, but not by much. 

For China, Iran was a useful but never a vital economic partner. In 2021, China signed a deal to eventually invest US$400 billion in Iran in exchange for a steady flow of oil. China’s investment up to the start of the war was only a small fraction of that figure. As University of Pennsylvania analyst Aaron Glasserman summarizes, “Iran needs China, but China does not need Iran.”

Regime change in Tehran would not be a serious problem for Beijing. The two countries shared a common opposition to the US global agenda, but their bilateral relationship up to now has been based on pragmatic rather than ideological grounds. 

As a reminder, Iran is a predominantly Muslim country, and China is infamous for the mass persecution of its Muslim population. Beijing’s relationships with other Gulf states are deeper—China has 10 times more trade with Saudi Arabia than with Iran.

Iran’s role as an energy supplier has been significant, supplying about 13% of China’s oil imports. China bought Iranian oil and gas at discounted prices, saving billions of dollars on its annual fuel import bill.

Nevertheless, a short-term closure of the Strait of Hormuz, through which about half of China’s imported oil and 30% of its imported natural gas passes, is manageable for Beijing. 

The country has a strategic petroleum reserve that can cover an estimated 100 to 120 days of normal oil usage. Some tankers bound for China are reportedly getting through the Strait of Hormuz. 

The Chinese government is negotiating with Tehran to secure safe passage for all China-bound ships, and is also exploring an alternative route that would bypass the Strait of Hormuz. As a result of the war, China loses prestige relative to the US in one sense but gains it in another.

The Russia-China bloc looks somewhat weaker relative to the US bloc. The military humiliation of Iran occurs as Venezuela and Cuba are also under intense US pressure to sever their close ties with China. 

Meanwhile, the success of the US and Israeli armed forces has been stunning. Even many Chinese observers are envious of this demonstration of American military prowess in a region nearly halfway around the world.

Chinese international relations scholar Shi Yinhong, for example, said the seizure of Maduro from Venezuela and the strikes against Iran indicate that US military power is “superior” and that America’s “methods of warfare have further evolved.” 

China, for its part, did nothing substantial to help its friend Iran. Chinese officials even denied reports that China was supplying Iran with anti-ship missiles that could be used against US warships. 

Russia has reportedly provided Iran with intelligence data to guide strikes against US forces, but this has not significantly hamper the American war effort. The unity of the Global South, of which China implicitly claims to be the leader, is reduced as attacks by Iran on the other Gulf states have caused them to side more closely with the US.

In 2023, China appeared to be a new regional power broker as it mediated a superficial reconciliation between the governments of Saudi Arabia and Iran. Chinese Foreign Minister Wang Yi touted the agreement as “a major victory for dialogue and peace.” 

China’s “victory” in that case now looks meaningless, as Gulf Arab states, including Saudi Arabia, are reportedly encouraging the US not to stop bombing Iran too soon.

On the other hand, Chinese officials and media have taken advantage of a war that is unpopular globally (and even within the US) to reinforce core themes of China’s strategic communications: the US as a global troublemaker, contrasted with China’s responsible leadership. 

Chinese commentators depict the US as an outlaw country that causes instability and war, even intentionally targeting civilians – a particular sore point with China since US aircraft bombed the Chinese Embassy in Belgrade in 1999. They accuse the US of perfidy because Washington opted for military action while still in the midst of negotiations with Iran’s government.

Conversely, China describes its own actions as compassion for the victims of war, advocacy of peaceful negotiations, support for the United Nations and defense of the principle of national sovereignty. 

Chinese official sources, for example, frame internal opposition to the Iranian government as an attempted “color revolution” that exists only because of US-Israeli sponsorship—similar to the way the Chinese government blames dissent inside China on “foreign black hands.”

The war in Iran will accelerate the pre-war trend of a worldwide decline in favorable views of the US, benefiting China. At the same time, US military success against Iran could reduce Beijing’s confidence that it would prevail in a fight against American forces in the Asia-Pacific region. 

On the positive side for China, the war against Iran is diverting more US attention and resources toward the Middle East, leaving less to deter Chinese expansionism in eastern Asia — despite the latest US National Security Strategy and National Defense Strategy prioritizing Asia as second only to the Western Hemisphere in importance.

US Under Secretary of Defense for Policy Elbridge Colby still insists, “We are laser-focused on the First Island Chain.” Yet the US military is withdrawing THAAD and Patriot air defense batteries from South Korea to send to the Gulf, along with a Japan-based amphibious assault ship and 2,000 Marines.

US armed forces are also quickly burning through stocks of precision munitions that would be needed in any war against Chinese forces, including over Taiwan. These include Precision Strike Missiles, Tomahawk land attack and anti-ship cruise missiles, Joint Air-to-Surface Standoff Missiles, Long-Range Anti-Ship Missiles, and heavy torpedoes (such as the Mk-48 that sunk the Iranian frigate, Dena). 

These weapons are expensive and time-consuming to build. Stocks were already too low before the Iran conflict, and replenishment will take two years or more. Some links in the supply chain that feed production are small companies with no surge capability.

Does the temporary dip in US capabilities invite a Chinese military attack against Taiwan or one of China’s rival South China Sea claimants? Probably not. This scenario implies that Xi Jinping has already decided to settle the dispute by military force and is waiting until his chances of winning are sufficiently high. 

It is much more likely, however, that Xi will remain hesitant to go to war, for at least three reasons. 

First, a Chinese victory is uncertain, and even a military success (such as Chinese troops occupying Taipei or seizing a rival’s South China Sea possessions) would be accompanied by lingering conflict and economic and political turmoil that could endanger the regime. 

Second, there is no pressing need for China to take military action now beyond the gray-zone actions that already keep constant and debilitating pressure on its potential regional adversaries. 

Third, the next two years are an especially bad time for China to start a war. China’s military high command is still reeling from the recent purge of many senior commanders for unclear reasons.

Xi has the chance to secure a major economic deal with the US in the coming months, provided the two countries can avoid a serious falling out. Improved access to US markets and technology remains essential for China to meet its economic development goals. 

Finally, the 21st National Congress of the Chinese Communist Party will take place in the fall of 2027. Xi will be seeking support for a fourth term as General Secretary, and thus disinclined to launch a risky foreign policy venture that could invite criticism.  

The war has caused the postponement of the Trump-Xi summit originally planned for the end of March and early April. That means a delay in China achieving a possible economic deal with the US. Even in this instance, however, Beijing managed to flex on Washington.

On March 15, Trump threatened to postpone his trip to China unless the Chinese government agreed to send warships to help keep the Strait of Hormuz open. Trump said he wanted to know China’s answer to the question before traveling, adding that “we may delay.” 

Several US media outlets and even the pro-China, Hong Kong-based South China Morning Post took Trump’s statement as a “threat” intended to force Chinese cooperation. Treasury Secretary Scott Bessent later “clarified” that Trump postponing his trip “would have nothing to do with the Chinese making a commitment to the Strait of Hormuz.”

Beijing seemed very interested in everyone getting the revised message. Foreign Ministry spokesperson Lin Jian said the US linkage of Trump’s visit to China providing ships to patrol the Gulf was “completely false” and “based on the misguided media reports.” 

The Chinese Communist Party-run Global Times followed up with an article headlined “US swiftly denies that any delay in Trump’s China visit is tied to request for China to help reopen Hormuz,” calling this a “China-related smear advanced by Western media.”

The Chinese government objects to the appearance of playing a supporting role to the US military in a globally unpopular war and also to the idea that China must pay the US a new concession to keep the Trump-Xi summit on track.

An early bilateral economic deal with the US is desirable for China, but not a desperate need. Goldman Sachs expects China’s economy to grow 4.8% in 2026, which is in line with the Chinese government’s stated target. 

The percentage of Chinese exports the US buys has decreased to 14% as China has expanded its sales to other markets. The current bilateral truce in high tariffs is in force until November 2026, and the two governments could easily agree to extend it.

The delay might indirectly benefit China by slowing US arms sales to Taiwan, as the Trump administration is reportedly considering holding back another arms sale until after the next Trump-Xi meeting.

This is, of course, a fluid situation. Final conclusions about how the war impacts China will depend on how the conflict proceeds—its length, possible escalation and lasting results. 

For now, while seeing that the US would still be a formidable opponent in a short war, Beijing also learns that the US is still vulnerable to getting bogged down in the Middle East, and in the process, accruing more international criticism. 

What mainly tips the balance of gains and losses for a bystanding Beijing is the possibility of a long-term closure or partial closure of the Gulf to shipping traffic, which could go so far as to trigger a global recession—for which, Chinese officials would say, China is not responsible. 

Denny Roy is a senior fellow at the East-West Center in Honolulu