The conventional wisdom was that a destabilizing war in the oil-producing heart of the Middle East would badly hurt China, the world's leading oil importer, and its sputtering economy. It hasn’t worked out that way. So far, China is weathering the US-Israeli war with Iran better than many of its neighbors and looks set to emerge relatively stronger.
Unlike Vladimir Putin and Donald Trump, who have launched wars against overmatched opponents only to face unwelcome surprises, President Xi Jinping has avoided unnecessary risks to position his country for long-term strength and stability. We saw Xi’s caution in his responses to both the COVID-19 pandemic and China’s structural economic weaknesses of recent years. We also saw it in Xi’s unwillingness to directly support Russia’s war in Ukraine, or even to recognize Putin’s territorial claims. Now we see it in Xi’s reluctance to criticize Trump’s bombing campaign against his allies in Tehran, or to come to Iran’s direct aid. The invitation for the US president to visit Beijing next month stands.
It helps that China is less damaged by this war than it would have been even a few years ago. Its oil stockpiles and strong refining capacity limit the risk of near-term fuel shortages. Pipeline gas imports and domestic gas production now ease its need for liquified natural gas from the Middle East. If the war drags on, Beijing can get more energy from friendly countries, particularly Russia, and can turn to both its vast coal reserves and its renewable power sources.
The war has even provided some advantages. China’s fully-integrated supply chains make it better able than rival exporters to contain production costs. And the continuing disruptions to energy shipments through the Strait of Hormuz, which have sharply increased both oil prices and the cost of insurance for shipping, will boost demand for China’s clean tech exports, lifting long-term investment in electrification while diversifying away from oil and gas. These processes were well underway before this war – they’re central to what Eurasia Group identified as 2026’s second-biggest geopolitical risk, the growing divergence between China’s electrostate and America’s petrostate models – but the conflict’s destruction of fossil-fuel infrastructure and fears of more to come will now accelerate them.
Strategically, China also benefits from a war that has weakened American firepower. The conflict has depleted US stockpiles of long-range cruise missiles and interceptors that will take years to rebuild. Those shortages are already rippling outward: THAAD components have been pulled from South Korea, Patriot batteries are unavailable for Ukraine and US allies in Asia, and the redeployment of US naval and air assets to the Middle East has thinned coverage in the Indo-Pacific. The cumulative effect is to erode American deterrence in the theaters where Beijing has the most at stake, while allies from Seoul to Tokyo quietly reassess how durable Washington’s security commitments really are. All of this deepens Washington’s already-acute dependence on Beijing’s exports of the critical minerals needed for the production of new weaponry and ammunition. The US could plausibly find workarounds to China’s restrictions in the next three to five years, but a decade is a more realistic timeframe. In the meantime, Trump will have a weaker negotiating hand with his Chinese counterpart, with whom he plans to meet in Beijing next month. China also benefits from ongoing damage to America’s reputation as a reliable international actor as both wealthy and developing countries look to hedge their bets on Washington’s foreign policy future.
Beyond those advantages, the war is giving China’s military planners a close look at how the US deploys air and naval power in real time, and how the Americans are now using AI on the battlefield. That’s valuable intelligence, particularly for any scenario involving Taiwan. Beijing has been watching the drone-based disruption tactics Iran has used against shipping in Hormuz and is considering how similar approaches could work in the Taiwan Strait, for instance in a quarantine scenario designed to test US responses without triggering a full military confrontation. China’s own advanced, low-cost offensive drone and anti-drone capabilities make this an increasingly attractive option.
If Xi faced democratic elections in a few months – with growth underwhelming, unemployment rising, and the Iran war's costs adding to his woes – he’d be tempted to exploit this moment. The US is maximally distracted and short on firepower, allies are hedging, and Washington is still dependent on Chinese minerals. What better time to move on Taiwan? Even short of invasion, a serious escalation could at least marginally improve Xi’s position, whereas doing nothing would risk a major defeat.
But of course, China’s strongman doesn’t face that pressure, and he’s not eager to take risks. His preference is for peaceful reunification with Taiwan, with military force as a last resort. He’s well aware that Chinese forces haven’t faced a shooting war since a border clash with Vietnam 47 years ago, and China has never fought a naval battle. His ongoing purge of Communist Party heavyweights with ties to the PLA, the most extensive since the 1980s, suggests Xi knows his military is not ready for a showdown.
China also wants to be seen as the responsible, stabilizing great power – the country others should want to draw closer to, not fear and hedge (as opposed to the United States under President Trump). The first meeting in over a decade between Xi and the leader of the Kuomintang, Taiwan’s largest opposition party, last week was designed to paint him as a constructive force committed to peaceful ties ahead of Trump’s visit to Beijing (as opposed to “troublemaker” Taiwanese President William Lai). The same logic drives Beijing’s broader posture on the global stage: a special envoy dispatched to the Middle East, a joint peace initiative issued with Pakistan, ceasefire proposals for Gaza and Russia-Ukraine. None of it has produced more than symbolic engagement, but that’s the point: all the reputational benefits of responsible great-power behavior, none of the costs.
Which is also why China feels no particular need to get directly involved in the Middle East war to come out ahead. Reports this week that it may have shipped shoulder-fired missiles to Iran – and Trump’s threat to slap 50% tariffs if true – are almost certainly less than meets the eye. Beijing’s longstanding practice has been to supply dual-use components that end up in Iranian missiles and drones while maintaining plausible deniability; overt weapons transfers during active hostilities with the US would be a sharp departure from decades of careful policy. Trump himself seemed skeptical, saying the reports “don’t mean much to me, because they're still fake,” and by Wednesday morning was posting that China had agreed not to send weapons. Neither side has any interest in blowing up the upcoming summit – let alone the bilateral relationship – over Iran.
China is increasingly confident it can win the peace without getting anywhere near the war. Trump won’t get the regime change in Tehran he set out to achieve anyway, and a resilient Iran can keep raising the costs for an increasingly unpopular superpower. Every day the war continues, more of the region’s governments conclude that good relations with Beijing are indispensable for reconstruction and long-term stability. Bilateral trade has tripled in the past two decades: China is the Middle East’s biggest oil customer, and the region has become an increasingly important market for Chinese exports, including green tech, cloud architecture, AI platforms, and smart city systems. China can also expect a seat at the table when the fighting stops, especially to ensure the Strait of Hormuz remains open long term – something Washington has made clear it considers the rest of the world’s problem.
All that said, if this war continues longer than a few more weeks, the calculus will start to shift against Beijing. The US naval blockade significantly curtails China’s oil imports from Iran. Beijing will avoid direct confrontation with Washington over it, but mounting economic pain will give China greater incentives to push harder for a negotiated end to the conflict. Chinese leaders also know that medium-term economic disruptions from further damage to Gulf energy infrastructure and threats to Chinese tech infrastructure remain a risk. It won’t help China’s flagging economy if markets in Asia and Europe – which together absorb roughly 60% of Chinese exports – suffer the kind of growth slowdown that cuts into demand for Chinese-made goods.
Xi also has to be nervous about Trump’s continued willingness to use unilateral military force to get what he wants from governments he sees as unfriendly. No doubt a politically-divided and dysfunctional United States creates real opportunities for Beijing, but these may be outweighed by the threat such a volatile and confrontational superpower poses to global peace and prosperity. Contrast this to Russia, a spoiler with nothing to lose from maximal instability.
In short, China can count itself among the very few winners in this war. But there are diminishing returns to US-induced chaos, and they run out fastest for the country with the most at stake in a stable, open world. At this point, Beijing wants the war to end more than it wants its core adversary to keep shooting itself in the foot.
