As the US and Israel opened a new chapter of chaos in the Middle East, China stands to benefit from a Washington establishment that does not have the political or physical resources to focus on Asia.
Officially, China has condemned the attacks. Chinese Minister of Foreign Affairs Wang Yi (王毅) called them “unacceptable” and demanded a ceasefire — rhetoric that is typical of Beijing in response to US President Donald Trump’s increasingly erratic foreign policy moves.
Wang made similar comments after the US capture of then-Venezuelan president Nicolas Maduro in January. The Chinese government wastes no opportunity to present itself as the defender of international laws and stability, although it provides little material support to smaller partners in the crosshairs of the US president’s latest furies.
Illustration: Mountain People
However, aside from the chance to score diplomatic points, Trump’s decision to embark on a war against Iran that is already widening into a regional conflict creates a space for China to once more leverage its critical mineral dominance, particularly in the area of defense, and places the issue of Taiwan on an increasingly long list of concerns for the US.
However, the strikes on Iran do pose some risk to China, especially when it comes to oil.
China is thought to buy about 80 percent of Iran’s shipped oil. That accounts for about 13 percent of China’s seaborne imports, although grasping the true scale of China’s Iranian oil imports is difficult, because much of it is labeled as originating from Indonesia or Malaysia to avoid US sanctions.
Losing cheap oil from Iran would be a blow to China, although a manageable one. However, it is barely two months since the US in effect took control of Venezuela’s oil industry, another, albeit much smaller, source of cheap supply for China.
More than one-fifth of China’s oil imports last year came from sources, including Venezuela, Iran and Russia, that had been placed under sanctions, according to an analysis by Erica Downs, a senior researcher at the Center on Global Energy Policy at Columbia University.
Two of those supply chains are now imperilled, and on Saturday, Kirill Dmitriev, the head of Russia’s sovereign wealth fund, wrote on X that prices could be “US$100+ oil per barrel soon.” Prices of the benchmark Brent crude hit US$82 per barrel on Monday, a 14-month high.
“This is not coming at a good time for China,” said Alicia Garcia-Herrero, chief economist for Asia Pacific at the investment bank Natixis, adding that China was facing surging energy demands because of the rapid rollout of data centers needed to train artificial intelligence, a key pillar of China’s economic plans for the next five years.
“The trend is less and less oil at below market prices,” she said.
On Sunday, Hualue American Studies Center, a Shanghai-based think tank with government links, said that a 2021 China-Iran strategic partnership agreement, worth US$400 billion, could also be at risk if the leadership in Tehran was replaced with a pro-Western regime.
However, China has been strengthening its strategic buffers. Only a tiny fraction of the US$400 billion promised in 2021 has actually been delivered. Moreover, perhaps mindful of geopolitical shocks on the horizon, China spent last year building up stockpiles of oil, demand for which is likely to peak soon as China’s green transition accelerates. Its crude oil imports rose 4.4 percent last year, with more than 80 percent of that increase being stockpiled, according to calculations based on data from Rystad Energy.
That means it would be able to weather any shocks to its supply — both from the loss of Iranian oil and from disruptions in the Strait of Hormuz — for at least a few months.
Some analysts said that the biggest harm done by a shock in oil prices would be to Trump, who wants to keep a lid on inflation in the US in the run-up the midterms in November.
There might also be some aspects in which China could benefit from the unrest unleashed by Washington’s military salvoes.
Launching a new offensive in Iran would deplete stockpiles of US weapons for both the US and Israel. Last year, the Pentagon halted weapons shipments to Ukraine because of concerns about dwindling stockpiles. The Guardian reported that the Pentagon has only 25 percent of the Patriot missile systems needed for its military plans.
And yet, the US has deployed much of its most powerful weaponry for Operation Epic Fury in the Middle East, including Patriot and Terminal High Altitude Area Defense systems, as well as F-35 jets and other advanced kit.
These weapons are all reliant on semiconductors and radars made with gallium, a critical mineral whose supply chain China controls. During last year’s US-China trade war, Beijing cut off the export of gallium and other rare earths, nearly crippling global industrial supply chains and forcing Washington’s hand in trade negotiations.
Some analysts said that Trump’s decision to open a new military front at a time when the US is still dependent on China for a crucial defense industry commodity would strengthen China’s hand for the upcoming meeting between Trump and Chinese President Xi Jinping (習近平) in Beijing.
“Beijing will be delighted to see the US expending scarce munitions and interceptors in a secondary theater. Drawing down existing weapons stockpiles will not only lower resources available for a Taiwan contingency, but China’s critical minerals dominance could give it leverage over the production of new weapons,” said Joseph Webster, a senior fellow at the Atlantic Council think tank.
Matthew Funaiole, a senior fellow at the Center for Strategic and International Studies, said gallium is primarily used in the sensors rather than the expendable components of most munitions.
“The more sustained vulnerability is not in firing them, but in the ability to manufacture, upgrade and repair the broader ecosystem of gallium-enabled systems,” he said.
US attempts to build up non-China supply chains of critical minerals such as gallium are still in their early stages and “are unlikely to meaningfully change supply dynamics in the immediate term,” he added.
There are nonetheless risks for China on the horizon. Some analysts said the elimination of a second leader of a Chinese strategic partner in as many months would dent China’s appeal to global south countries. In the past three years Iran joined the Shanghai Cooperation Organization and BRICS, two China-led multilateral organizations. China also brokered a detente between Iran and Saudi Arabia, which looks somewhat meaningless now that there are questions about the extent to which Saudi Arabia might have supported the US strikes.
Still, a US foreign policy establishment that is preoccupied with yet another sprawling, unpredictable conflict, far from China’s neighborhood, is likely to bring more gains than losses for Beijing.
Additional research by Lillian Yang
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