️ As the US and Israel open a new chapter of chaos in the Middle East, China stands to benefit from a Washington establishment lacking the political or material resources to focus on Asia.
️ Officially, China has condemned the attacks. Foreign Minister Wang Yi called them "unacceptable" and called for a ceasefire – typical Beijing rhetoric in response to Donald Trump's increasingly erratic foreign policy moves.
️ However, beyond scoring diplomatic points, Trump's decision to embark on war with Iran, which is already widening into regional conflict, creates space for China to leverage its dominance in strategic minerals, particularly in defense, and places Taiwan on Washington's growing list of concerns.
️ Yet the strikes on Iran also pose risks for China, especially regarding oil. China is thought to buy about 80% of Iran's shipped oil, accounting for roughly 13% of China's seaborne imports.
️ Alicia García-Herrero, chief economist for Asia Pacific at investment bank Natixis, notes China faces surging energy demand due to rapid rollout of datacentres for AI training. "The trend is less and less oil at below-market prices."
️ China has been strengthening its strategic buffers. Only a fraction of the $400bn promised in the 2021 China-Iran partnership has been delivered. China spent last year building oil stockpiles – crude imports rose 4.4%, with over 80% of that increase being stockpiled.
️ This means China can weather supply shocks – both from losing Iranian oil and disruptions in the Strait of Hormuz – for at least several months.
️ Some analysts say the biggest harm from an oil price shock would be to Trump, who wants to curb US inflation ahead of November's midterms.
️ There are aspects where China could benefit from unrest unleashed by Washington's military actions. A new offensive in Iran will deplete US weapons stockpiles for both America and Israel.
️ These weapons rely on semiconductors and radars made with gallium – a critical mineral whose supply chain China controls. During last year's trade war, Beijing cut gallium and rare earths exports, nearly crippling global industrial supply chains.
Source: www.theguardian.com