The 2026 Iran war exposes China’s energy vulnerabilities but simultaneously creates strategic space for Beijing to expand diplomatic influence, recalibrate partnerships, and advance its position within a shifting global order
The late-February 2026 US and Israeli military strikes on Iran, including the assassination of Supreme Leader Ayatollah Khamenei, alongside the long-standing Washington–Tehran rivalry, carry significant implications for China’s geopolitical and economic interests. As the world’s largest energy importer and a rising global power with expanding interests in the Middle East, China is highly exposed to regional instability. A US–Israel conflict with Iran that draws in other regional actors would not only reshape Middle Eastern security dynamics but also affect China’s energy security, global trade networks, diplomatic strategy, and position within the liberal economic order. For Beijing, the Middle East has historically been a region of economic engagement rather than direct security involvement. However, expanding investments and infrastructure development under the Belt and Road Initiative (一带一路) have significantly increased China’s stakes in regional stability. Consequently, a prolonged escalation would pose both significant risks and strategic opportunities for China.
For Beijing, the Middle East has historically been a region of economic engagement rather than direct security involvement.
Energy Security and Oil Market Volatility
The most immediate impact of the US–Israel conflict with Iran is China’s vulnerability in energy security. China is the world’s largest crude oil importer, and a significant portion of its supply comes from the Persian Gulf. According to Kpler’s 2025 data, China accounts for more than 80 percent of Iran’s oil exports, averaging 1.38 million barrels per day. US sanctions on Iran’s nuclear program have restricted global buyers, though Iranian crude is sold at a discount. Chinese independent refiners, commonly referred to as ‘teapots’, mainly in Shandong province, are the principal buyers, drawn by lower prices despite sanctions-related risks.
A prolonged military confrontation in the Persian Gulf could disrupt oil markets by affecting Iranian production and constraining key shipping routes, leading to sharp fluctuations in global prices.
A prolonged military confrontation in the Persian Gulf could disrupt oil markets by affecting Iranian production and constraining key shipping routes, leading to sharp fluctuations in global prices. Such volatility would directly impact China’s manufacturing sector, which has underpinned its economic growth for nearly four decades and remains heavily dependent on stable and affordable energy supplies. Rising oil prices would increase industrial costs, fuel domestic inflation, and potentially slow China’s already moderating growth trajectory. To mitigate risks emanating from instability in the Middle East, Beijing has sought to diversify its energy sources, including through pipeline imports from Russia and Central Asia. However, the region remains an indispensable component of China’s long-term energy security.
Strategic Importance of China–Iran Relations
Over the past decade, China and Iran have developed a significant political and economic partnership, culminating in the 2021 comprehensive long-term cooperation agreement spanning investments in energy, infrastructure, and technology under an “oil-for-infrastructure” framework. This relationship aligns with China’s broader strategic objective of enhancing Eurasian and European connectivity through the Belt and Road Initiative (一带一路). Several Chinese-backed projects in Iran—including the electrification of the Tehran–Mashhad railway, the proposed Tehran–Qom–Isfahan high-speed rail line, and major energy investments such as Sinopec’s US$ 2.1 billion contract to upgrade the Abadan refinery, along with solar projects by LDK Solar—reflect the depth of this cooperation.
However, a major military escalation involving the United States could destabilise Iran’s domestic political and economic structures, placing these investments and critical transport corridors at risk. Despite this, China has chosen not to become directly involved in the conflict. One factor behind Beijing’s ‘hands-off’ approach may be its reservations regarding the level of popular support for Iran’s clerical regime. Qiu Wenping of the Religious Studies Research Office at the Shanghai Academy of Social Sciences argues that sustained economic sanctions, alongside domestic economic pressures, have worsened conditions for the Iranian population and contributed to broader public discontent reflected in protests against mandatory headscarf regulations.
A major military escalation involving the United States could destabilise Iran’s domestic political and economic structures, placing these investments and critical transport corridors at risk.
In this context, US actions may be viewed as attempts to amplify dissatisfaction with the regime and create conditions conducive to a ‘colour revolution’ through shaping the global narrative. While Iran has portrayed Israel as an adversary, scholar Yun Sun argues that Israel’s ability to target Iranian scientists and military personnel suggests that sections of the Iranian state apparatus may lack trust in the regime. She further contends that Beijing’s primary interest lies in securing oil rather than ensuring the longevity of the Iranian regime.
Tehran’s proposal to allow oil tankers to transit the Strait of Hormuz—an important maritime route for global energy trade—conditional on transactions being conducted in Chinese yuan has complicated Beijing’s position and raised concerns about potential strain in US–China relations. Beyond questions of feasibility, Gong Jiong of the University of International Business and Economics cautions that compliance with yuan-settlement mechanisms may not protect such shipments from the risk of targeting by US or Israeli forces.
In the current context, Beijing appears to be weighing these risks against broader strategic considerations, including high-level diplomatic engagement with Washington. A potential meeting between President Donald Trump and Chinese President Xi Jinping could contribute to a limited easing of trade tensions. Trump has indicated that he may delay his upcoming visit to Beijing if China does not help “unblock” the Strait of Hormuz.
Implications for US–China Strategic Competition
The conflict between the United States and Iran intersects with the broader strategic competition between Washington and Beijing. For China, American military intervention under ‘Operation Epic Fury’ (史诗狂怒行动) in the Middle East demonstrates the continued projection of US power in the region and its capacity to shape the regional security architecture. However, it also provides China with an opportunity to advance its diplomatic narrative. Beijing frequently criticises Washington’s unilateral actions across international forums and emphasises principles such as sovereignty, non-interference, and negotiated conflict resolution. It also continues to promote its four global initiatives—the Global Security Initiative (GSI), Global Governance Initiative (GGI), Global Civilisation Initiative (GCI), and Global Development Initiative (GDI)—as frameworks for a more stable international order. In the current context, China can position itself as a responsible actor by advocating diplomatic engagement over military escalation, particularly among countries in the Global South that remain sceptical of Western interventionism. Furthermore, if the United States becomes deeply engaged in a Middle East conflict, it could temporarily divert strategic attention from the Indo-Pacific, a key arena of global power competition. Such a shift may create strategic space for China in its core areas of interest, including the South China Sea and the Taiwan Strait.
Long-term Strategic Recalibration
Over the long term, sustained US–Iran tensions—within the broader US–Israel confrontation with Iran—could reshape China’s strategic planning in several ways. First, China may accelerate its energy diversification strategy to reduce overreliance on Middle Eastern imports. Greater investment in renewable energy, alongside expanded reliance on Russian pipelines and Central Asian energy infrastructure, would help hedge against volatility in global oil markets and strengthen long-term energy security.
Ultimately, China’s strategy is likely to focus on balancing these risks and opportunities, seeking to maximise its security, economic, and political interests while avoiding direct military involvement in the region.
Second, rising geopolitical tensions could deepen cooperation between China and other powers that oppose unilateral military intervention, particularly Russia. Such alignment may contribute to the gradual emergence of alternative geopolitical configurations.
Finally, prolonged instability in the Middle East could accelerate the fragmentation of the global order and negatively affect perceptions of the United States among its regional partners and beyond. As tensions intensify, regional conflicts risk expanding into broader geopolitical rivalries, potentially resulting in protracted confrontations similar to the Russia–Ukraine war.
Conclusion
A US–Israel-led attack on Iran, alongside the continuation of long-standing rivalries in the region, would have far-reaching implications for China. Beijing’s economic dependence on Middle Eastern energy, its markets for Chinese goods, and its expanding investment and connectivity initiatives increase its exposure to regional instability. While such a conflict could disrupt China’s energy security and trade networks, it may also create opportunities to expand its influence and advance its vision under the Global Governance Initiative (全球治理倡议) (GGI).
Ultimately, China’s strategy is likely to focus on balancing these risks and opportunities, seeking to maximise its security, economic, and political interests while avoiding direct military involvement in the region. This approach may also be shaped by ongoing diplomatic considerations, including the anticipated visit of President Donald Trump to China later this year. In this context, the evolving rivalry will remain a critical factor shaping China’s Middle East policy and broader strategic outlook in the coming years.