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In a series of posts on truth Social Tuesday morning, Donald Trump celebrated the fragile ceasefire between Iran and Israel.
Presida.
Trump has announced that sees fire agreement between Israel and Iran, saying end it's the.
Twelve days of war. He says a truce is scheduled to take effect in about five hours time.
And highlighted what he saw as one of the benefits of peace, China can now continue to purchase oil from Iran.
After President Trump says that China can buy Iranian oil.
You can see we're trading below sixty eight dollars a barrel.
Now we pop hopefully, Trump added in his post, they will be purchasing plenty from the US. Also, China is Iran's biggest trading partner and sources about fourteen percent of its oil from the country. Between China's economic relationship with Iran and its ongoing trade and botiations with the US, America's strike against Iran has put China in a difficult position.
Beijing, meanwhile, has criticized a US strike on Iranian nuclear facilities, saying again it's willing to join international efforts to restore peace in the Middle East.
China, like many countries, also buys oil from Iran's neighbors that passes through the Strait of Hormoots, which Iran has threatened to shut down. On Sunday, Secretary of State Marco Rubio spoke with Fox News and called on China to apply pressure to Iran when it comes to the Strait.
I to encourage the Chinese government in Beijing to call him about that, because they heavily depend on the Straits or Hormones for their oil. If they do that, it'll be another terrible mistake. Its economic suicide for them if they do it.
My Big Take Asia co host Juan Ha spoke with our colleague John Lou who oversees coverage of China from Beijing. They talked about what the Israel Iran conflict has revealed about China's influence in the Middle East and where China's economic relationship with Iran could go from here.
I would expect China to take advantage of the situation in that it will point to the United States and say, look, the US is providing arms to Israel and those arms are being used to create instability in the Middle East, and I think the Chinese will primarily use the situation as a way of painting the United States as the unreliable global partner.
This is the Big Take Asia from Bloomberg News. I'm Sarah Holder with one Ha in Hong Kong today on the show What's at Stake for China in Iran and how the conflict could change China's game plan not just in the Middle East but on the global stage.
John, thanks so much for joining us.
It's a pleasure to be here.
John. We're speaking on Tuesday afternoon. What do we know about how the Chinese leadership views this conflict in the Middle East and the US involvement in it?
First and foremost, I think the number one priority on chijing pings to do list is the economy. And even though China is not as much involved in this conflict as many countries in the Middle East and closer to the Middle East are, it is affected economically. It gets a notable amount of energy from Iran, It gets a
lot of energy from the Middle East. Chinese companies are doing business in the Middle East, the electric car companies for example, and so if anything, Beijing would like to see everybody get back to business.
China condemned the US attacks on Iran's nuclear facilities and pushed a ceasefire proposal at the United Nations. How consistent is that with China's foreign policy approach when it comes to conflicts.
One of the things that China has tried to do over the last couple of years, especially with President Trump's return to office, is really portray itself as being this champion of the developing world, of the global South, and they have used conflicts like the one between Israel and Hamas and Gaza and now with Iran to try to portray itself as being the responsible player on the global stage, and the United States as being less responsible, as being
the one who is causing chaos, taking actions that are disrupting trade, causing death and destruction in the Middle East.
China and Iran have a long history of cooperation, solidified during the Iran Iraq War in the nineteen eighties, and China is one of Iran's biggest supplier of arms. In recent years, China's invested in Iranian infrastructure, telecommunications, and energy sectors, and the two countries signed a twenty five year cooperation agreement to strengthen their economic and political alliance. John, how important is China to Iran's economy and vice versa.
There is I would say an alignment of interest between these two nations. They both are seek looking alternative paths to economic development that may have been shut off or stymied by the United States or the West. In general, I would say China is far more important to the Iranian economy than Iran is to the Chinese economy. China is the major buyer of Iranian oil that is a
crucial source of income for the regime in Tehran. The data that we've seen from third party consultants, people who track this data, China is buying about one point one million barrels of oil from Iran a day in the month of May this year. That's down about twenty percent, but it accounts for about ten percent of how much oil China is buying every month. China's buying about eleven twelve million barrels of oil a day, and about one
million plus comes from Tehran, so it is important. Ten percent is a lot, but it is not so high that Beijing is dependent on that oil as being the main driver of its economic growth.
Last November, a Bloomberg investigation detailed how billions of dollars of sanctioned Iranian oil is getting into China, even though on paper the country hasn't imported a single drop since mid twenty twenty two. How does that oil trade play into the geopolitical tensions with the US?
It plays into the geopolitical tensions with the US because the United States is trying to cut off income to the Iranian regime, and so if there are buyers of that oil even though the sanctions are in place, that is undermining the purpose of those sanctions being put into place. And so if Washington could put pressure on Beijing to buy less Iranian oil, that would increase the leverage that potentially Washington would have with Tehran at the bargaining table.
Now, about twenty percent of global oil goes through the Strait of Hormuse every day. The strait is between Iran, Oman and the United Arab Emirates. It's one of the world's busiest oil shipping channels. The US asked China to urge Iran to not close the straight after the US bombed Iran's nuclear facilities over the weekend. What does that say about China's influence over Iran and its role in this conflict.
China's influence on Iran, I think is very well known and pronounced. We have, of course, had China mediating return to normal diplomatic ties between Iran and Saudi Arabia a couple of years ago, and China could play that role because of the relationship that it has with both Saudi and Iran, and so I think there is influence. How much of it that Beijing is willing to use or deploy,
I think that is hard to know. I think though, that also Iran knows China needs the oil to keep going, and I don't think Iran necessarily needs Beijing to remind it that the Strait of Hormus is very important to Beijing. I think that's very clear to the Iranian And you know, Iran also wants to sell that oil. It needs the income to come in, and so there's many many factors that Tehran would have to consider before it shut that straight.
That seems unlikely at this point. But if China's access to Iranian oil was cut off some other way, where would China get its oil?
I mean, the other places that China buys a lot of its energy from include Saudi Arabia, include Russia and those places. I'm sure, given the current global environment in terms of energy supplies, would be more than willing to ramp up their provisions to the Chinese market. The other thing is China is actually getting to a point where it's oil demand may be peaking. The International Energy Agency predicted that oil demand from China would peak in twenty
twenty seven, so that's very close. In the broader picture, China is really investing in solar and wind and alternative energies because it sees that as the future, but also the economy is not doing that great, which means demand is not growing that quickly.
Now I want to put it into stark terms, John without oil, what use then is Iran to China without oil?
I think there is a diplomatic advantage in having friends in the Middle East for China. China wants to portray itself as the champion of the developing world and being able to point to Tehran, being able to show that it's helped a neighbor develop, being able to show it's given support to this country in the Middle East does help China in its relationship with other parts of the world, and so there are additional benefits to China in addition to oil with a weekend Iran.
Where does that leave China's influence in the Middle East? That's after the break after the US bombed Iran's nuclear facilities, you had Saudi Arabia, Qatar and other Persian Gulf countries express dismay over the attack. Given that China has been a supporter of Iran and Iran is now on the back foot because of this conflict, does this in any way dent China's influence?
I think it does put in some questions about some of these organizations that China has been a part of. So I'm thinking of the Shahai Cooperation Organization, which Iran is a member of. It includes China, includes Russia, and these are meant to be groupings that are supposed to help country members with creating an alliance of like minded states.
I think the fact that these groupings have not been able to step in and help Iran as it was under attack from foreign forces will make them less compelling of a grouping for other countries to join. Where do we secure our security if we cannot secure it by aligning ourselves with China or aligning ourselves with Russia. I think that ultimately underlines the idea that it is really the United States alone that is a global power with reach anywhere around the world.
And of course, in this conflict, we've seen that the US is willing to insert itself into Israel's war against Iran. How might China be viewing this in relation to Taiwan right in its own backyard, which the US, through a congressional act provides defensive arms to.
The focus of Chinese military planners has always been what to do in case of a conflict over Taiwan. I don't think the US bombing of the nuclear sites in Iran changes Chinese calculation about how to respond to some sort of provocation about Taiwan, or how to respond if there was a conflict in the United State it did intervene in that conflict. The United States does sail warships through the Taiwan Straight on a regular basis in the
South China Sea. There are American bases in Japan, in Korea, in the Philippines, on Guam, and so I would expect that Chinese military planners have considered all potential possibilities and are planning for them. But I don't think this changes the view that China has of Taiwan in any substantial way.
Iran will likely need help rebuilding. Will China step up and consolidate its relationship with Iran and its presence in the Middle East? Or do you think it's more likely that it would step back and see what happens in the region.
I think immediately China will wait and see how things sort of unfold. I think in a median term, there would be definite interests not only by the Chinese government but lots of Chinese companies and helping to invest and rebuild. There will obviously be American sanctions. There are already on what businesses can do in Iran. There may be more to come, and so this will depend on how discussions
between the US and Tehran go. But if those sanctions were to loosen it all, I think you would see a lot of Chinese interests in helping to rebuild Iranian infrastructure. Probably not in nuclear nuclear especially as it relates to defense or weapons related technologies. That that would be I imagine something Beijing would be extremely careful about touching.
It was President Donald Trump who first announced the ceasefire between Israel and Iran. China has been largely on the sidelines of this conflict. What does the US involvement in China's response tell us about their rivalry to influence and shape world geopolitics.
You know, the narrative we've had for many years has been about how quickly China is catching up to the United States. And we hear that when it comes to GDP, when it comes to trade, when it comes to manufacturing, when it comes to AI and technology and chips. What this episode I think shows is actually how big the gap remains when it comes to the thing that matters the most when it comes to geopolitics on the global stage, which is military capability. There is nowhere in the world
that the US cannot touch if it's so desired. And the United States has also shown that when its interests are infringed, when its interests are at staked, is willing to take those actions. Those are things that cannot be said about China, and I think it underlines how big the power differential remains between these two countries.
This is the Big Take Asia from Bloomberg News. I'm wanha to get more from the Big Take and unlimited access to all of bloomberg dot com. Subscribe today at bloomberg dot com Slash podcast offer. If you liked the episode, make sure to subscribe and review The Big Take Asia Wherever you listen to podcasts. It helps people find the show. Thanks for listening, See you next time.