China’s Iran balancing act grows more costly

 China is showing growing unease over the economic and strategic costs of Iran’s confrontation with the United States, even as it continues to shield Tehran diplomatically at the United Nations.

US President Donald Trump said during his recent visit to Beijing that Chinese President Xi Jinping stressed the importance of keeping the Strait of Hormuz open.

China’s foreign ministry has also repeatedly called for the Strait of Hormuz to reopen “as soon as possible” and urged a “comprehensive and lasting ceasefire” between Iran and the United States.

Before the closure of the Strait of Hormuz, roughly 45 percent of China’s oil imports passed through the strategic waterway.

As Brent crude futures surged to $117 per barrel and physical oil cargoes traded at prices as high as $150, China responded by cutting oil imports by 20 percent last month and raising domestic gasoline and diesel prices on May 9.

Reuters reported that China’s producer prices climbed to a 45-month high in April, while consumer inflation also accelerated.

But the damage to China’s economy goes far beyond energy supplies.

Although Beijing has yet to release customs data for April, March figures already point to a sharp collapse in Chinese exports to the region.

According to Chinese customs statistics, exports to Persian Gulf countries fell to just $5.7 billion during March—the first month of Iran’s blockade of the Strait of Hormuz—down from $13.2 billion the previous month.

In other words, Chinese exports to the Persian Gulf region plunged by 57 percent within a single month.

These figures represent only part of the economic fallout facing China. Chinese companies implemented or invested in approximately $39.4 billion worth of projects across the Middle East last year.

But with the region sliding deeper into conflict and Iran launching extensive attacks against its Arab neighbours, many of Beijing’s regional investments are facing growing uncertainty.

Expectations among those states that China should pressure Tehran should not be underestimated. China exported roughly $340 billion worth of goods to Iran’s Arab neighbours. That’s roughly equivalent to the entire size of Iran’s economy.

Beijing cannot simply ignore the concerns of its wealthy regional partners.

One potential lever available to China may be reducing purchases of Iranian crude. Data from Kpler shows that despite strong demand, China cut imports of Iranian oil by nearly one-third in April compared to March, reducing purchases to 1.16 million barrels per day.

China also remains Iran’s largest non-oil trading partner.

Beijing has nevertheless continued to back Tehran diplomatically. China and Russia opposed recent US-backed UN resolutions on the Strait of Hormuz, arguing the measures were one-sided and risked fueling further escalation.

China’s UN envoy Fu Gong said the proposed resolution was “not helpful” and argued that both its timing and content were wrong.

Still, Iran continues to serve as an important strategic card for Beijing in its broader rivalry with the West. But despite the growing economic costs, China is unlikely to support any outcome that would leave Tehran strategically defeated by Washington.

https://www.iranintl.com/en/202605165555