The Iran war is a gift to China
As the war with Iran blows up and cools down from week to week, one trend is clear: The biggest beneficiary of this conflict is China.
Beijing did not have to fire a shot, spend vast sums or use up political capital. But it has gained more from this crisis than any in three decades. The war accelerated three of China’s long-held goals: a Middle East less dependent on America; a world more dependent on critical Chinese technology; and a reputation for Beijing as a serious and steady world power.
Beijing hasn’t tried to replace Washington as the Middle East’s military guarantor; that would require expensive commitments. Its aim has been simpler and more subtle: Get Gulf states to detach somewhat from the American orbit. President Donald Trump is doing much of that work for Chinese leader Xi Jinping.
America’s Gulf allies have watched Washington wage this war in chaotic fashion and with little regard for the damage inflicted on its cities, infrastructure and economies. The Persian Gulf is now dividing into two camps. The United Arab Emirates is drawing closer to Israel and Washington. But a larger group, led by Saudi Arabia and including Qatar, Oman and perhaps Iraq and even Turkey, is likely to seek long-term security through a balance: continued ties with the United States, but also dialogue with Iran and better relations with China.
That is precisely the regional order Beijing has favored. In 2023, China brokered the restoration of diplomatic relations between Saudi Arabia and Iran. Riyadh has since resisted joining certain American-led data center and computer chip projects. It has bought Chinese missiles and drones, held exercises with the Chinese navy and explored local production of Wing Loong combat drones. Gulf countries accounted for more than 80 percent of Chinese defense exports to the Middle East from 2016 through 2025. No one is trying to replace America’s security umbrella. But they want options — and options reduce American leverage.
China’s more impressive victory is geo-economic. At first glance, a country that imports about 70 percent of its oil should be among the war’s biggest losers. Yet China has weathered the shock better than most countries because it spent years preparing. It diversified suppliers, built what is estimated to be the world’s largest oil stockpile, continued using coal, expanded nuclear power and electrified its economy on a scale no other major country has matched.
Electricity now accounts for about 30 percent of Chinese energy consumption, almost 40 percent more than in the U.S. or Europe. China installed more than half of all new global wind and solar capacity in 2024. For all these reasons, China was able to cut back on its imported oil purchases during the war by some 4 million barrels a day.
The war has become a giant advertisement for China’s critical technologies. Governments everywhere are looking to build up their solar power, batteries, wind turbines, electric vehicles and grids. China controls about 91 percent of global solar-panel manufacturing capacity and 89 percent of lithium-ion battery capacity. Chinese firms manufacture at least 70 percent of almost all clean-energy technologies tracked by Bloomberg. The longer energy insecurity persists, the more the world will buy into industries China dominates.
The war also advances a key Chinese goal: weakening the dollar’s hold over global commerce. Iran reportedly allowed some tankers through the Strait of Hormuz on the condition that transactions be settled in Chinese renminbi (or in cryptocurrency). China and its partners have effectively expanded renminbi-dominated trade to reduce exposure to American sanctions. The shift will be gradual, but the trend is now unmistakable — away from dollar dominance.
Finally, there is the reputational windfall. The Trump administration entered this war with grand goals: regime change, destruction of Iran’s nuclear program, eradicating its ballistic missile capabilities and its support for regional proxies. It has achieved none durably. Instead, it is now hoping simply to open the Strait of Hormuz, which was open before the war began.
Trump chose this war and in doing so blew through tens of billions of dollars, wasted America’s munitions, diverted military assets from Asia, unsettled allies and demonstrated that even with America’s enormous power, a misguided strategy and constantly changing tactics produce bad results.
China did remarkably little. It kept buying Iranian oil, maintained relations with the Gulf states, avoided the costs of defending Iran or policing the Gulf. This is Beijing’s preferred approach, no dramatic confrontations but rather the steady accumulation of influence.
Over the last 25 years, the United States has exhausted itself in three major military adventures in the greater Middle East while China has accumulated manufacturing power, technological capacity and diplomatic relationships. Washington acts; Beijing waits. China has paid costs for this war — higher energy prices, disrupted supply chains and weaker global demand.
But power is always relative. Measured against the damage to America’s goals, alliances and credibility, China has come out ahead.
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