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As the Middle East grapples with escalating conflict, China is acutely aware of the potential repercussions for its economic and geopolitical ambitions. While the immediate impact of the war has yet to significantly disrupt China’s oil supplies, the long-term implications could deeply affect its investments and strategic interests across the globe. This week, during a crucial gathering of Communist Party delegates in Beijing, discussions are underway regarding the future direction of the world’s second-largest economy, which is currently facing a myriad of challenges, including sluggish consumer spending and a mounting property crisis.
Economic Challenges Amidst Geopolitical Turbulence
Despite having sufficient oil reserves to last several months, China’s leadership is keenly aware that its energy security could be jeopardised if the conflict persists. Historically reliant on the Middle East for energy, Beijing is apprehensive about potential disruptions in shipping routes, particularly through the vital Strait of Hormuz. The longer the hostilities continue, the more dire the consequences could be for China’s broader economic health.
Philip Shetler-Jones from the Royal United Services Institute warns that prolonged instability in the Middle East could jeopardise China’s investments in Africa, which have benefitted significantly from capital flows originating from the Gulf. “If the investment tide goes out, this risks wider instability that undermines the sustainability of China’s broader and longer-term interests,” he notes.
The Fragile Partnership with Iran
China’s relationship with Iran is often portrayed as an alliance, yet it is primarily transactional in nature. The partnership was solidified during a visit by President Xi Jinping to Tehran in 2016, culminating in a 25-year strategic agreement in 2021, during which China pledged to invest $400 billion (£300 billion) in Iranian infrastructure and energy sectors. However, analysts suggest that actual investments have fallen short of expectations, even as China continues to import significant quantities of Iranian oil—approximately 1.38 million barrels per day in 2025, constituting about 12% of its total imports.
Despite the complexity of this relationship, China’s approach remains cautious. While Beijing has condemned recent US and Israeli military actions, claiming they are “unacceptable,” it is also aware of its limitations in influencing the situation. The reliance on Iran for energy, combined with the backdrop of US sanctions, has placed China in a precarious position.
Navigating a Volatile Global Landscape
China’s aspirations to position itself as a stabilising force in international relations are being tested in the current climate. While it has called for a ceasefire and framed itself as a responsible counterweight to US influence, its inability to intervene effectively in conflicts involving its partners highlights its limitations as a global superpower.
Professor Kerry Brown from King’s College London asserts that China’s relationship with Iran lacks the ideological underpinnings of traditional alliances. “There’s no real ideological or cultural reason why China would get on with Iran,” he explains. This fragile foundation raises concerns about China’s ability to support its partners effectively in times of crisis.
The Unpredictable US Factor
The unpredictable nature of US foreign policy adds another layer of complexity to China’s strategic calculus. With President Trump expected to visit the region soon, Beijing is poised to assess how US actions might influence the broader geopolitical landscape. While maintaining a critical stance towards US interventions, China has not directly blamed Trump, which may facilitate diplomatic engagement.
Shetler-Jones suggests that if the current conflict proves unpopular in the US, it could lead to a shift in American foreign policy towards greater restraint, potentially granting China more leeway to pursue its interests without significant pushback. However, the volatility of US actions presents a double-edged sword for Beijing, which is wary of a world dominated by an erratic superpower.
Why it Matters
The unfolding situation in the Middle East poses significant challenges for China, threatening to disrupt its economic stability and complicate its international relations. As Beijing grapples with the repercussions of the Iran conflict, its ability to navigate this landscape will be tested. The outcome could reshape not only China’s strategic ambitions but also the balance of power in the Asia-Pacific region and beyond. With its investments at stake and the global order in flux, the stakes have never been higher for the Chinese leadership.
