Key Takeaways
The conflict in Iran is affecting most parts of the world, but few as much as China.
While the United States reduced its dependence on Middle Eastern oil by increasing domestic production, China has increased its imports from the region, particularly from Iran.
China has been purchasing 90% of Iran’s oil despite U.S. sanctions and paying for it with infrastructure investments.
China has also invested heavily in the region, increasing its stake in energy and industrial expansion throughout the Middle East.
U.S. tariffs on Chinese goods have driven Chinese products into Middle Eastern markets, which are also affected by the closure of shipping in the Strait of Hormuz.
Speaking on the Iran conflict, President Trump said, “We’re doing this for other parts of the world, like China.” China has a lot to lose in the conflict. China is the largest importer of Iran’s oil and has grown reliant on the Middle East’s supply of oil and gas, but it also exports other commodities to Middle Eastern countries and is heavily invested in the region. After President Trump imposed tariffs on China, China sold fewer goods to the U.S. market, which had once been its biggest consumer, and turned to the Middle East.
According to the New York Times, the United Arab Emirates became the fastest-growing market for Chinese cars, and demand for Chinese steel from Saudi Arabia and its neighbors doubled. China’s exports to the Middle East grew nearly twice as fast as its exports to the rest of the world in 2025. Across the region, governments were interested in China’s renewable energy devices and other technology.
China also invested billions of dollars — $89 billion from 2019 to 2024 — into facilities in the Middle East, some of which were hit by Iranian military strikes. The effective closure of the Strait of Hormuz, where over 80% of the transited oil gets exported to Asian markets, is also closed to container ships carrying Chinese goods. The Chinese shipping giant COSCO stopped bookings through the strait, and Maersk, the Danish company, suspended certain critical routes in the Middle East.
The Times reports that China imports a little over half of its seaborne oil from the Middle East, and about a quarter of that comes from Iran, which is under U.S. sanctions. China is the main buyer of Iranian oil, purchasing about 90% of Iran’s oil exports, although those imports accounted for just over 13% of the seaborne oil China imported in 2025. According to the Wall Street Journal, the countries have concealed the transit of Iranian oil to China by using ship-to-ship transfers to disguise it as coming from other countries, such as Malaysia. China then pays Iran for the oil with infrastructure investments, avoiding international banks.
A loss of Iranian oil would force China to find other sources that would be much more expensive than the discounted oil it bought from Iran. To insulate itself from disruptions to energy imports, China has built up strategic and commercial oil reserves totaling 1.3 billion barrels, bought cheap oil under sanctions, and promoted electric vehicles and other technologies to reduce its reliance on oil, because it has few oil resources of its own.
China has expanded its presence in the Middle East, providing loans for contracts and projects throughout the region. According to the New York Times, China’s global portfolio of loans and grants to the region doubled to 10% in 2023. State-owned financial institutions extended loans to oil refineries and seaports that finance the production and transport of commodities. In Qatar, Chinese banks are funding and building a major expansion of a liquefied natural gas production facility. China’s state-owned oil giant Sinopec holds a stake in the facility’s North Field East expansion project that was attacked last week by Iran.
Chinese investors have funded the expansion of the United Arab Emirates’ Khalifa Port, and the resulting terminals are owned and operated by Chinese companies, reports the New York Times. In Iran, Chinese companies have financed, built, and run infrastructure, electric grids, and petrochemical plants. China’s Power Construction Corporation is the largest builder of desalination facilities in the Middle East, with projects in Saudi Arabia, the Emirates, Oman, and Iraq.
Via the Washington Post, in March 2021, China and Iran signed a 25-year comprehensive strategic partnership, with China pledging $400 billion in long-term infrastructure and energy investments under its Belt and Road Initiative. But progress has been slow and hampered by U.S. sanctions on Iran. In 2023, Iran was welcomed into the Shanghai Cooperation Organization, deepening its integration into China-led security institutions, after first applying for membership in 2008 and joining as an observer in 2005. But that has not helped Iran in its time of need. While China has condemned the U.S. and Israeli attacks on Iran, it has taken little action to support Iran, as it has relationships with other Middle Eastern companies. Chinese investments in Saudi Arabia and the United Arab Emirates far exceed its investments in Iran.
Analysis
The U.S. and Israeli strikes on Iran have far-reaching implications, including foiling China’s relationship with the country. After Trump’s tariffs reduced U.S. purchases of Chinese goods, China turned to the Middle East for investment and growing markets in steel, electric vehicles, and solar panels, which are now at stake. The effective closure of the Strait of Hormuz not only disrupted oil and gas flows but also hampered the movement of Chinese goods that were stuck on cargo ships. If the war becomes prolonged and trade through the Strait of Hormuz continues to be disrupted, China could look to new markets for its goods.
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