As tensions escalate in the Middle East, China finds itself grappling with the ripple effects of the ongoing Iran conflict. While the nation has adequate oil supplies for the immediate future and can potentially rely on Russia for assistance, the long-term implications for China’s ambitious economic and geopolitical strategies raise significant concerns. As thousands of Communist Party delegates convene in Beijing to outline a roadmap for a struggling economy, China’s leadership must carefully consider how instability in the Middle East could derail its investments and aspirations.
Economic Challenges Amid Global Unrest
China is currently facing a trifecta of economic challenges: sluggish consumption, a protracted property crisis, and mounting local debt. In response, the government recently revised its annual economic growth target to the lowest level since 1991. This comes at a time when Beijing is striving to pivot towards high-tech and renewable energy sectors as a means to rejuvenate its economy. However, with trade tensions with the United States still simmering, the prospect of ongoing conflict in the Middle East adds another layer of uncertainty.
The Strait of Hormuz, a crucial corridor for oil shipments, is now under the shadow of potential disruption. Philip Shetler-Jones of the Royal United Services Institute warns that prolonged instability in the region could have cascading effects, particularly on African economies that have benefitted from Gulf investment. “If the investment tide goes out, this risks wider instability that undermines the sustainability of China’s broader and longer-term interests,” he notes.
Fragile Alliances: China and Iran
Historically, China has maintained a complicated relationship with Iran, often characterised as transactional rather than ideological. The partnership deepened significantly following Xi Jinping’s visit to Tehran in 2016, culminating in a 25-year strategic agreement in 2021, which promised $400 billion in Chinese investments in exchange for a steady flow of Iranian oil. However, analysts reveal that only a small fraction of this investment has actually materialised.
China’s oil imports from Iran reached approximately 1.38 million barrels per day in 2025, accounting for roughly 12% of its total crude oil imports. Many shipments are reportedly disguised as Malaysian oil to circumvent sanctions. Despite the apparent camaraderie, the relationship remains precarious. “There’s no real ideological or cultural reason why China would get on with Iran,” says Professor Kerry Brown from King’s College London. “China’s strategy has often benefited from Iran being a constant irritant to the US.”
The Role of the US and Future Implications
The conflict has not only strained China’s relationship with Iran but has also highlighted its limitations as a global influencer. While China has called for a ceasefire and condemned US and Israeli actions in Iran, its ability to intervene effectively has been called into question. Shetler-Jones argues that while Beijing is attempting to position itself as a counterbalance to the US, it does not possess the military reach to act decisively in such conflicts.
With US President Donald Trump scheduled to visit China, Beijing is treading carefully. Any criticism of US actions is notably absent of direct attacks on Trump, which may facilitate smoother discussions during the forthcoming meeting. Observers speculate that this visit could provide China with valuable insights into US foreign policy direction, particularly regarding contentious issues like Taiwan.
The ongoing war poses a dual challenge for China: it must navigate the instability without becoming embroiled in the conflict, all while attempting to safeguard its own economic interests and regional ambitions.
Why it Matters
The unfolding situation in the Middle East is not merely a regional concern; its ramifications extend globally, particularly for countries in the Global South that are heavily reliant on stable energy supplies. As the conflict persists, the potential for economic disruption will likely exacerbate existing vulnerabilities in these nations. For China, the stakes are high—not only must it protect its investments and energy needs, but it must also strategically position itself as a stabilising force in an increasingly unpredictable world. The balance between leveraging relationships and avoiding entanglement in foreign conflicts will be crucial for Beijing in the coming months.
