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The escalation in the conflict between Iran and Israel has sent shockwaves across the Middle East and through global markets. While much of the focus has been on the United States role, there's another economic powerhouse that's watching closely. As Middle East energy expert Alan Wald explains.
China is a really big player. China is basically the largest customer for these Persian golf producers that includes Iran and Saudi Arabia and other And you don't want to kick the nest when it comes to China. China is not going to like it if their ships are disrupted, if there are access to oil is disrupted.
So here's why China is a key player in the Israel Iran conflict. Our Greater China Executive editor John Lewell joins us now for more John, First of all, how important is Iran to China.
China is the world's largest importer of oil and needs that oil to power its economy. That economy has been weak. It's been struggling with consumer prices, it's been struggling with efficiency and productivity. Higher oil prices is not going to help that. And volatility upheaval in the Middle East and around the world is not going to help. It's not going to mean people are going to buy more Chinese exports.
And so much of the oil that China needs comes from the Middle East, And because of American sanctions, China is substantially the biggest buyer of Iranian oil, and so the sticks are high.
So a strong economic link then between Iran and China. But what about Beijing's relationship with Israel? How close are those countries.
The relationship with Israel is a difficult one at the moment, and primarily that is because of how close a relationship Israel has with the United States and the fact that China and the United States are embroiled in this rivalry. And so as part of that rivalry between the US and China, China has wanted to present itself on the global stage as being a champion of the global South, and the Muslim world is a very important part of that global South that China wants to get on its side.
And so whenever there's been a conflict Israel's conduct in Gaza, in Lebanon, and now with Iran, China has on the global stage stood with the Muslim countries as part of this attempt to become this champion of the global South.
What is Beijing said about this escalation between Iran and Israel so far?
So a day after the bombings in Iran started, a Chinese Foreign Minister Wang You called both the foreign ministers of Iran and the fore minister of Israel. He told the Iranian foreign minister the China condemned the attacks, and he told the Israeli foreign minister that China was very opposed to the attacks. And so a few days after that, President Sheijing Ping came out and said that China was
deeply worried about the situation in Iran. And in both instances, President Chi and Foreign Minister Wang You have come out to say that China wants to play a role in diplomacy that they do not think diplomacy has been you know, lost the way. They still think diplomacy is a way that the nuclear issue can be resolved.
China has been a mediator in the Middle East before brokering a deal between Saudi Arabia and Iran and in twenty twenty three. Is the region a strategic priority for Chinese?
I wanna say it is a priority, although I think in this instance it will be more difficult for China to play the mediator than it was in twenty twenty three with Iran and Saudi Arabia, because China has a relatively good relationship with both Iran and Saudi Arabia, whereas we are just discussing the relationship with Israel and by extension, the United States has been much more difficult, and so I think there would be much more suspicion on the part of Israel and the United States on how fair
and unbiased the mediator China could be in the situation.
What should we have learned from how China has responded to previous episodes of violence and then at least to understand how their response might play out from here.
I think the response will be limited to rhetoric, and I think you will hear a lot of rhetoric coming out of Beijing condemning the Israeli attacks, also drawing a line between Israel and the United States. But I think it will stay at rhetoric because one China has actually deeper economic ties with Saudi Arabia and the Gulf States. China not only buys energy from those places, but it
also invests in those places. You have Chinese companies building factories there, There's a Chinese self driving company, pony Ai, who's putting driverless vehicles on the roads in those countries, and so that economic relationship is much deeper than the one that China has with Iran. And I think also it's important to note that if this conflict results in the United States being embroiled and yet another Middle East conflict, Beijing's not going to be unhappy about that.
What could provoke a greater reaction from China in terms of defending its links to Iran.
I think if there was some action directly against the regime, that there was an effort to topple the regime, I think that would be very sensitive to China, because there is the suspicion in Beijing that ultimately that is what the United States wants for China as well, regime change, and so I think you would see an uptick in the rhetoric. But again, I don't think it would go beyond that. I don't think Beijing is ready to take up arms for Iran.
How does what's happening in the Middle East play into where China's relationship is with the United States at the moment? Will the trade issues become embroiled and influence how China is going to act from here?
I think China will use what's happening with Iran as a propaganda tool. We've seen that with Gaza, We've seen that with Lebanon. I think we will see it again. We will see China try and paint Israel in the United States as being co conspirators and conducting themselves poorly on the global stage. I don't think China wants to be embroiled any further than that. And I don't think China is going to, let's say, offer rare earth magnets of the United States, let's up on, you know, supporting Israel.
I don't think those cards are on the table.
John lou Are, Greater China Executive Editor, thank you very much. For more explanations like this from our team of three thousand journalists and analysts around the world, go to bloomberg dot com slash explainers. I'm Stephen Carroll. This is here's why. I'll be back next week with more. Thanks for listening.