China's economy hinges on a peaceful Middle East
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Sarah Grillo/Axios
Broader conflict in the Middle East could jeopardize China's energy needs and economic interests in the region, analysts say, just as China's economy is facing its roughest headwinds in decades.
Why it matters: Beijing is making a big diplomatic push for peace in the region, where it has significant sway among Arab states and Hamas-backer Iran.
- China "is highly exposed to the current instability in the Middle East, especially if it escalates," Philip Andrews-Speed, a specialist in China's oil policies at the National University of Singapore, told the New York Times.
- Driving the news: Zhai Jun, China's special envoy to the Middle East, has just completed trips to Egypt and Qatar, where he promoted China's call for a ceasefire in the Israel-Hamas war.
Details: As the world's largest oil importer, China depends on stable energy markets to fuel its economy. About half of China's oil imports come from the Persian Gulf.
- Saudi Arabia is China's number two source of crude oil, and Qatar is one of China's top sources of liquefied natural gas.
- This year China's oil imports from Iran rose to more than one million barrels a day as the U.S. and other countries placed sanctions on Iran, Russia and Venezuela.
- "China's economic interests in the region are primarily focused on energy supplies from the Gulf," as well as digital connectivity and infrastructure deals in several countries, Jean-Loup Samaan, a senior research fellow at the National University of Singapore's Middle East Institute, told CNN.
- "Those interests would get hurt if the conflict escalates with Iran and challenges the stability of maritime waters in the Persian Gulf," he said.
The big picture: China has also placed a growing emphasis on including the Middle East in its Belt and Road Initiative (BRI).
- Officials from China and six Gulf states held a trade and economic forum this week, where all parties agreed to further align their development strategies with the BRI, per the South China Morning Post.
- China's investment in Iran increased 150% in 2022, according to Chinese officials. Iranian President Ebrahim Raisi said he supports the BRI and wants to see closer cooperation with China, in a speech during his visit to Beijing in March.
Yes, but: Beijing's emphasis on trying to avoid offending all sides could make it difficult to apply the kind of pressure that is needed for negotiations in the entrenched Israeli-Palestinian conflict, analysts say.
- China has significant sway in Iran, and could lean on Tehran to pressure Hamas to make concessions. But Beijing so far hasn't indicated it is willing to spend its diplomatic capital to resolve the current conflict.
- "China under Xi wants to be respected and admired everywhere, including in the Middle East, but it is ultimately unwilling to do what it will take to resolve the really hard regional security issues," Steve Tsang, director of the SOAS China Institute in London, told Reuters.
- "It goes for the low-hanging fruits and basically stops there."
