As the conflict in the Middle East unfolds, China finds itself grappling with the potential long-term implications for its ambitions and investments. While the immediate effects of the war have yet to disrupt China’s oil supplies significantly, the nation is acutely aware of the precariousness of its strategic positioning. This week, thousands of Communist Party delegates convened in Beijing to deliberate on the future trajectory of the world’s second-largest economy, which is currently contending with sluggish consumption, a persistent property crisis, and overwhelming local debt.
Economic Concerns Amidst Geopolitical Turmoil
China has lowered its annual economic growth forecast to the lowest level since 1991, a move reflecting mounting pressures on its economy. Although the country has been making strides in developing high-tech and renewable energy sectors, the ongoing trade war with the United States has complicated efforts to rebound through export-led growth. The situation is exacerbated by the turbulence in the Middle East, a region critical for both energy supplies and major shipping routes.
Philip Shetler-Jones from the Royal United Services Institute warns that prolonged conflict in the Middle East could disrupt economic stability in regions integral to China’s interests, including Africa, which has benefited from substantial investments from Gulf nations. “If the investment tide goes out, this risks wider instability that undermines the sustainability of China’s broader and longer-term interests,” he explains.
The Fragile Alliance with Iran
China’s relationship with Iran has often been perceived as one of mutual benefit, cemented by a 25-year strategic partnership established in 2021, which promised $400 billion in Chinese investments in exchange for a steady flow of Iranian oil. However, analysts have pointed out that actual investments have fallen short of expectations. Despite this, China continues to import significant quantities of crude oil from Iran, with reports indicating that in 2025, the country imported 1.38 million barrels per day from the Islamic Republic.
The dynamics of this alliance, however, are far from stable. While China has engaged in arms sales and technology exchanges with Iran, including allegations of support for Iran’s ballistic missile programme, the relationship remains transactional rather than ideological. “There’s no real ideological or cultural reason why China would get on with Iran,” notes Professor Kerry Brown from King’s College London. “It’s a very fragile basis for a relationship.”
A Cautious Diplomatic Approach
China’s response to the escalating conflict has been measured. Foreign Minister Wang Yi condemned the actions of the US and Israel, particularly the assassination of Iranian leaders, labelling such moves as unacceptable. Despite this, Beijing has found itself sidelined in recent international crises, unable to provide tangible support to its partners.
As China positions itself as a stabilising force amid global unrest, it faces the challenge of maintaining its interests without becoming embroiled in conflicts. The nation is keenly aware of its limitations as a superpower, as Shetler-Jones points out, “China is not equipped to protect its friends against this kind of action, even if it wanted to.”
The Uncertainty of US-China Relations
With the highly anticipated visit of US President Donald Trump looming, China must tread carefully. Despite criticisms of US foreign policy, Beijing has refrained from directly targeting Trump, perhaps to ensure that diplomatic ties remain intact. The upcoming discussions are seen as an opportunity for China to gauge the US’s approach to various geopolitical flashpoints, including Taiwan.
The ongoing conflict may also serve as a catalyst for China to portray the US as a warmonger, a narrative that the People’s Liberation Army has already begun to promote through social media channels. However, the unpredictability of US actions poses a dilemma for Beijing. As Professor Brown observes, while China does not desire a world dominated by the US, it is equally wary of an unstable American presence on the global stage.
Why it Matters
The situation in the Middle East presents China with a complex web of challenges and opportunities. As the nation attempts to navigate its economic recovery while managing delicate international relations, the unfolding conflict could significantly reshape its strategic landscape. A prolonged crisis could disrupt not only China’s energy supplies but also its investments globally, particularly in regions that rely heavily on Gulf capital. In this ever-evolving geopolitical climate, China’s ability to adapt and respond will be crucial for its continued growth and influence.
