China's Concerns Amid Ongoing Iran-Israel Conflict

Global Impact of the Iran-Israel War

The ongoing conflict between Iran and Israel has raised alarms across the globe, with many nations expressing their concerns. The potential repercussions of this war could be severe, particularly with crude oil prices likely to soar, which would have a noticeable impact on the global economy, as has been observed in the past. Notably, China is particularly anxious about the situation due to its significant bilateral trade and investments in Iran.

China's Economic Interests at Stake

If the hostilities between Iran and Israel do not cease soon, it will not only affect their bilateral trade but also jeopardize China's substantial investments in Iran. This is why China is actively supporting Iran in various ways. The ongoing war poses a risk to China's economic interests, especially considering its status as the largest importer of Iranian crude oil, which constitutes 15% of its total oil imports. China aims to double this share to secure cheaper oil from Iran.

China's Strategic Moves in the Middle East

China is also leveraging its relationship with Iran to expand its influence in the Middle East. A 25-year cooperation agreement has been signed, wherein Iran will supply crude oil at reduced prices, and in return, China will invest $400 billion to bolster Iran's economy, including support for its defense systems. A lack of assistance from China could adversely affect its own economy, particularly in the oil sector.

Potential Financial Losses for China

According to Gordon Chang, a senior fellow at the Gatestone Institute, China accounts for 90% of Iran's total oil exports and has also aided Iran in strengthening its defense capabilities. Chinese weapons are currently in the possession of Iranian forces, Hamas, Houthi militias, and Hezbollah fighters. If Iran suffers any setbacks, it would directly impact China. Should there be a change in Iran's leadership and a shift to dollar-based trade, China could face significant losses estimated between $20 billion to $30 billion annually.

Bilateral Trade Figures

The Islamic Republic of Iran Customs Administration (IRICA) reported that during the first two months of the current Iranian calendar year (March 21 - May 21), the non-oil trade value between Iran and China reached $4.631 billion. According to Foroud Asgari, China was the top non-oil export destination for Iran during this period, importing goods worth $2.425 billion. Conversely, China exported $2.206 billion worth of goods to Iran, making it the second-largest source of non-oil imports for Iran.