️ As the US and Israel escalate chaos in the Middle East, China stands to benefit from a Washington establishment lacking the political or physical resources to focus on Asia.
️ Officially, China has condemned the attacks. Foreign Minister Wang Yi called them "unacceptable" and called for a ceasefire – rhetoric typical of Beijing in response to Donald Trump's increasingly erratic foreign policy moves.
️ However, beyond scoring diplomatic points, Trump's decision to wage war against Iran, which is widening into a regional conflict, creates space for China to leverage its dominance in critical minerals, particularly in defense, and places Taiwan on an increasingly long list of US concerns.
️ Yet, the strikes on Iran pose risks for China, especially regarding oil. China is estimated to buy about 80% of Iran's shipped oil, accounting for roughly 13% of China's seaborne imports.
️ Losing cheap Iranian oil would be a blow to China, though manageable. But it has been only two months since the US effectively took control of Venezuela's oil industry, another, albeit smaller, source of cheap supply for China.
️ According to analysis by Erica Downs of Columbia University's Center on Global Energy Policy, over a fifth of China's oil imports in 2025 came from sanctioned sources including Venezuela, Iran, and Russia. Two of those supply chains are now imperiled.
️ Natixis chief economist for Asia-Pacific Alicia García-Herrero notes this comes at a bad time for China, which faces surging energy demands due to rapid data center rollout for AI training.
️ However, China has been strengthening its strategic buffers. Only a tiny fraction of the $400 billion promised in 2021 has been delivered. China stockpiled oil last year, enabling it to weather supply shocks from lost Iranian oil and Hormuz Strait disruptions for at least several months.
️ Some analysts say the biggest harm from an oil price shock will be to Trump, who aims to curb US inflation ahead of November's midterms.
️ Additionally, China could benefit from unrest unleashed by Washington's military actions. A new offensive in Iran will deplete US weapons stockpiles for both the US and Israel.
️ These weapons rely 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 gallium and rare earth exports, nearly crippling global industrial supply chains.
Source: www.theguardian.com