Between two fires: how the war in the Middle East threatens China

The Chinese authorities called unacceptable attacks by Israel and the United States on Iran. The reaction is largely due to the fact that Tehran is Beijing's main ally in the Middle East and is one of its three largest oil suppliers. At the same time, China seeks not to spoil relations with Israel. Izvestia investigated what risks exist for China and its projects and whether it has leverage over the current situation in the region.

Beijing is against

"China opposes military strikes by Israel and the United States against Iran," Chinese Foreign Minister Wang Yi said, according to China Central Television. According to the diplomat, recent negotiations between Iran and the United States have made progress, including in resolving Israel's security issues, but this process has been interrupted by the armed conflict.

Against the background of the Israeli and US military operation against Iran, the Chinese Foreign Ministry held a series of telephone conversations on the situation in the region. On March 1, the head of the Ministry had a conversation with Russian Foreign Minister Sergey Lavrov. He called the attack on Iran unacceptable, as well as the open assassination of the leader of a sovereign state and incitement to a change of power.

The Chinese diplomat also expressed concern that the region "risks sliding into the abyss of conflict." In a conversation with the head of the Russian Foreign Ministry, Wang Yi outlined Beijing's position: calling for an immediate cease-fire, preventing the spread of war and getting the situation out of control, supporting restraint in the actions of the Persian Gulf countries, resuming negotiations as soon as possible, as well as mutual abstention from unilateral actions.

After that, the Chinese minister talked with colleagues from Oman and France. In his speech, he spoke about how he values the traditional Chinese-Iranian friendship, supports the country in protecting sovereignty and security, territorial integrity and national dignity.

In a conversation with the French minister, the Chinese Foreign Minister stressed that any illegal actions should be boycotted by the international community, and there should be no double standards. Beijing expressed the hope that Paris would adhere to an objective position, maintain a reasonable attitude towards the situation and, together with China, contribute to defusing the situation.

During the previous escalation between Israel and Iran last summer, Beijing also stressed that it supports Tehran, which defends its legitimate interests and rights. At that time, the Chinese authorities also opposed attacks on Iran and the use of force.

Chinese diplomacy

Calls to resolve conflicts through diplomacy within the framework of the United Nations or other international organizations are traditional for China. But this is especially true in the Iran-Israel conflict, since Beijing has economic interests with both countries. Tehran, in particular, supplies 90% of its oil to China (there is an exclusive energy purchase agreement between the states for a period of 25 years) and receives billions of dollars in investments in the energy sector.

Recently, cooperation has become even deeper: the parties have begun to conduct joint naval exercises, and therefore China is considered Iran's main diplomatic and economic ally in the region. The investment agreement between Beijing and Tehran from 2021 involves China investing $400 billion in the Iranian economy, despite the fact that the country is under severe Western sanctions. At the same time, China finances not only logistics in Iran — ports, energy, oil and gas production - but also the rearmament of the Iranian army.

It is natural that China is interested in protecting its economic interests and billions of dollars of investments in the infrastructure of the Islamic Republic. Beijing has long opposed U.S. sanctions against Tehran, criticized Washington's withdrawal from the Iran nuclear deal in 2017, and called the United States a source of tension and instability in the Middle East.

Important relations with Israel

At the same time, if Beijing has a commodity-based economy with the countries of the Muslim East, then it has a scientific and technical economy with Israel. The first deliveries of Israeli weapons to China began in the 1980s under the Chairman of the Central Military Council of China, Deng Xiaoping, and this experiment proved successful.

In particular, it was reported that Israel had transferred to China the know-how of the Lavi multipurpose fighter project (Chengdu J-10 in the Chinese version), which in many respects was equal or superior to American and Soviet counterparts of that time.

It was believed that this deal greatly helped to create a modern military aviation industry in China. Gradually, Israel took one of the main places in terms of military-technical cooperation with China.

For Beijing, such cooperation with West Jerusalem is an important part of the country's development program for its own armed forces and military—industrial complex. Chinese businesses have become actively interested in acquiring Israeli companies, both small innovative enterprises and large firms. Investors are mainly interested in Israeli technologies in areas such as the Internet, cybersecurity, medical equipment, alternative energy sources, and agricultural technologies, which is why Israel is considered a promising partner of China in the field of economic innovation development.

Close the strait

Unlike the previous escalation, during the current confrontation, Iran has imposed a ban on any movement through the Strait of Hormuz, which is unprofitable for China. Beijing, as Bloomberg reports, citing unnamed gas company executives, is trying to put pressure on the Iranian authorities not to interfere with the export of Qatari gas and other energy resources through this waterway.

Meanwhile, Tehran declared full control over the strait. According to Mohammad Akbarzade, a representative of the Islamic Revolutionary Guard Corps (IRGC) Navy, any vessels trying to pass through the strait risk being hit by drones or missiles. The IRGC also stated that it had allegedly destroyed more than 10 tankers.

This circumstance cannot but worry China, whose energy security is inextricably linked to stability in the Persian Gulf. Although Beijing has a contingency plan, including diversifying suppliers with the help of Russia, Saudi Arabia and African countries, China is interested in a stable global market, on which the country's energy security depends.

A painful blow

What is happening in the Middle East is also a blow to China's interests, since Tehran is one of its three largest oil suppliers, said Alexey Maslov, director of the Institute of Asian and African Studies at Lomonosov Moscow State University.

— Regime change in Iran is what the United States is seeking, it is also a change in the trajectory of Tehran's policy. But Beijing takes the position of an observer, because China has no serious levers of influence, except for speaking at the UN, activating the SCO, BRICS and other organizations, the expert explains.

The political scientist is confident that in the current situation, long-term destabilization of commodity and cash flows is possible. First of all, the normal logistics of the commodity market has been disrupted, especially supplies from China to Europe through Central Asia.

— It is obvious that in the next few weeks this commodity flow will be rebuilt, it will go in a more complex direction, — the interlocutor of Izvestia points out.

He believes that this will eventually lead to higher shipping costs. If the situation drags on, many market players will suffer.

— In addition, the price of oil and energy resources in general is increasing. The countries, especially in Central Asia, that supply oil and gas, will benefit from this, the expert is sure.

According to the analyst, China is methodically trying to cut off from oil resources. And the Chinese leadership is well aware that its strategic plans are being systematically attacked.

— Washington seeks to limit China's influence and, of course, is preparing for a clash with China, at least technically. This is, in fact, the destabilization of the situation in Inner Asia and the Middle East," Maslov sums up.

Avoid sudden steps

At the same time, China has close relations with all countries of the Middle East, recalls Vasily Kashin, director of the Center for Comprehensive European and International Studies at the National Research University Higher School of Economics.

— China is an investor in the Israeli port of Haifa, it has the rights to manage this seaport. And Iran is a promising partner for China in the energy sector and one of the important oil suppliers," says the political scientist.

The expert notes that Beijing has repeatedly condemned some of Israel's steps towards its neighbors. However, he expects Beijing to avoid radical steps that could lead to conflict with West Jerusalem.

Nelson Wong, Vice Chairman and President of the Shanghai Center for Strategic and International Studies of the Pacific Region, believes that the spike in oil prices provoked by the conflict could cause tension in the Chinese economy, increase production costs and increase inflationary pressures.

"Given these high economic stakes, one would expect Beijing to exert strong diplomatic pressure on Tehran to get it to reduce the degree of confrontation," the expert says.

The political scientist believes that this will not be easy to do, since China's foreign policy is based on the principles of non-alignment and non-interference in the internal affairs of other countries.

"In the eyes of the Iranian leaders, this makes China a reliable, albeit sometimes restrained partner in times of crisis. Tehran has no illusions that Beijing is capable of concluding a military agreement or directly challenging the United States," the expert is convinced.

According to him, the contrast between Western and Eastern diplomatic philosophies is becoming sharper against the background of what is happening.

"The Western approach, often characterized by ultimatums, regime change, and military interventions, has left a trail of instability throughout the region. On the contrary, China's approach — focused on economic development, mutual respect for sovereignty and strategic patience — offers an alternative paradigm," the analyst believes.

To Western experts who are accustomed to power diplomacy, this approach may seem overly cautious and incomprehensible, but the political scientist is confident that the validity of this method is becoming more and more obvious.

"By refusing to take sides in the religious and political rivalry in the Middle East, China has positioned itself as a reliable mediator, as can be seen in the example of the restoration of Iranian-Saudi ties," concludes Nelson Wong.