Why the Iran war won’t shake China’s Middle East strategy

“War is God’s way of teaching Americans geography”, so goes a saying often attributed to American writer and satirist Ambrose Bierce during the Civil War.

The US-Israeli war with Iran has focused greater attention on Iran and the surrounding region. The shuttering of the Strait of Hormuz has reduced the daily flow of around 20 million gallons of crude oil or 20% of global supply, mostly destined for Asia, to a trickle, pushing oil prices to over US$100 a barrel.

Even as US consumers are being hit with higher prices at gas stations, the US, which is self-sufficient in oil/gas production, is less vulnerable to energy disruptions in the Middle East. Yet geography and geology are less kind to China, which imports 55% of its oil from the Middle East, with around 13% from Iran. About 90% of Iran’s crude oil exports end up in China, with the bulk flowing through third-party channels from the Strait of Hormuz. In 2025, China also imported 19.4 million tons of liquefied natural gas (LNG) from Qatar, behind only Russia and Australia, for 28.1% of its LNG imports, also through the Strait of Hormuz.

Given China’s fossil fuel dependence on Iran and key Persian Gulf producers, many within and beyond the China-watching community expected a stronger response from China to the Iran war, instead of China’s typical call for de-escalation. Having argued that there is more to oil for China in the Middle East (with Abbās Varij Kāzemi in 2014), I examine why China is largely unaffected by the Iran war despite being potentially the most important geoeconomic player in the Middle East. 

China has, in fact, become much less dependent on Middle Eastern oil including from Iran, due to two reasons. First, China has been building up oil reserves as far back as the 1990s when it constructed a massive storage facility on an island off its eastern seaboard. In 2025, China began building 11 new oil reserve bases capable of storing 169 million barrels of oil. By the end of 2025, China’s oil reserves reached 1.2 billion barrels that can last over 100 days. From November 2025 to February 2026 alone, China imported 226 million tons of crude oil, enough for 18 days of national consumption. 

In addition, Russia has supplied more oil and gas to China via overland pipelines. This allows China to receive up to 50 million tons of oil annually, enough to fill 27% of a potential shortfall from the Middle East. China can also count on its major oil-producing African partners, Angola and Nigeria, to supply 35 million tons more every year to meet 19% of its needs. More oil has also been flowing from the Caspian Sea through the Kazakhstan-China pipeline since 2006. 

In 2009, Turkmenistan agreed to supply 30 billion cubic metres of gas to China annually through cross-border pipelines for 30 years. China has received both oil and gas from the Middle East to the Indian Ocean via two parallel pipelines through Myanmar since 2013 and 2017, respectively. The latter oil pipeline can send 20 million more tons to China at full annual capacity. Through this remaking of its energy map over the past two decades, China can better weather the oil shock from the Iran war, with its increased reserves and diversified supplies.

Second, China has diversified beyond fossil fuels by rapidly expanding its renewable energy sources, which collectively surpassed oil and account for 21.7% of China’s total energy consumed. This means 40% of the electricity generated comes from renewables. In 2025, China’s installed capacities of wind and solar power exceeded its added thermal power for the first time, helping China increase its power consumption to ten trillion kilowatt-hours, almost 2.5 times that of the US or equalling the combined amount of the EU, Russia, Japan and India. By accelerating its energy transition away from oil, China can more effectively deal with global energy shocks now and in the future. 

Many Western analysts see the strong China-Iran nexus as an integral part of the so-called “axis of ill will” with Russia and North Korea against the US-led West. This perspective glosses over China’s extensive but often lesser-known ties across the Middle East beyond Iran.

Since the 1990s, China has expanded its trade and investment footprints in the region. From 2005 to 2009, China’s total trade volume with the Middle East rose 87%, to US$100 billion and reached approximately US$222 billion in 2012. China’s launch of the Belt and Road Initiative (BRI) in 2013 has since expanded its economic presence in the Middle East. In 2024, China’s trade with the Middle East reached US$487 billion, becoming the largest exporter to eight of the ten Middle Eastern countries (Table 1).

China’s investment in the Middle East rose US$1 billion in 2005 to US$11 billion in 2009. By 2013, China’s cumulative investment in the region surged to approximately US$80 billion, US$35 billion of which was concentrated in the energy sector. In 2024, the Middle East became the top destination for Chinese infrastructure projects capitalised at US$39 billion, a 102% increase year-on-year.

Saudi Arabia led with US$19 billion, up from US$5.9 billion in 2023. China-invested projects have also included power plants and office towers. Interestingly, carbon-rich Middle Eastern countries have hosted China-led large-scale renewable energy projects. For example, phase 4 of Mohammed bin Rashid Al Maktoum Solar Park in Dubai, financed jointly by the Agricultural Bank of China and other investors valued at US$2.5 billion, is capable of generating 950 megawatts annually and providing green energy to 320,000 households. This project features new Chinese technology that combines concentrated solar power and solar photovoltaics.

As China’s trade and investment in the Middle East have soared, China-Iran economic relations have cooled. From a peak of US$45 billion in 2014, China-Iran trade dropped to US$23 billion in 2019 and to US$10 billion in 2025, down to 22.3% of the amount in 2014. In 2025, China had a US$4 billion trade surplus with Iran whose top two exports to China were crude polyethylene and metal minerals. 

This surplus would have been much lower if Iran’s indirect oil exports to China were included. Officially unreported by either country, Iran’s oil reaches China mostly through Malaysia, which ranks fourth among the top ten exporters of oil to China, after Russia, Saudi Arabia and Iraq. This indirect oil flow transacted in Chinese RMB, combined with decreased China-Iran trade, reveals Iran’s fragile economic position under heavy US sanctions as well as its eroding importance to China relative to other major Gulf countries.

Meanwhile, China has been strengthening its overland energy and trade connections to Iran via freight train links through Central Asia, as part of the BRI’s China-Central Asia-West Asia Economic Corridor. Spurred by the China-Central Asia Summit mechanism, China and Iran have built a freight-train route via several partially overlapped cross-border links, with extensions to Afghanistan and Turkey. 

As China led the China-Kyrgyzstan-Uzbekistan Railway into construction in 2025, Iran has proposed a route from and to China through Kyrgyzstan, Tajikistan and Afghanistan. If fully connected, China can send its freight trains west to Europe via Turkey and south to the Arabian Peninsula and the Persian Gulf through Iran.

In July 2024, a Chinese freight train travelled from Xi’an to Tehran in 15 days. Iran, in turn, sent a freight train all the way to the Chinese city of Yiwu near Shanghai. In May 2025, five countries (China, Kazakhstan, Uzbekistan, Turkmenistan and Turkey) agreed with the Iranian government to create a six-country rail corridor linking China and Europe. Just a month later, the Aprin Dry Port near Tehran, also the largest freight rail terminus for China-Iran cargo flows, was hit by Israeli fighter planes. 

Irrespective of this perpetual war risk in the Middle East, the China-Iran freight train, which can only carry around 50 wagon-sized oil tanks, is a very insignificant alternative to maritime shipping through the Strait of Hormuz. Moreover, the rail gauge incompatibility across countries, coupled with inefficient border-crossing, severely limits the overland China-Iran and China-Gulf energy and other economic ties.

As the Iran war lingers on, its end is foggy. One thing is already clear. China has withstood the oil shock, at least thus far. Besides sitting on and tapping into its abundant oil reserves, China has maintained steady oil/gas inflows through several energy corridors around its borders. China has also leveraged its world-leading position and capability in renewables, lending more strength to coping with the Iran war-induced energy crisis.

Away from the battlefield, China has led the construction and coordination of growing overland economic and logistics corridors to Iran and the broader Middle East through the BRI. If and when the war dust settles, these corridors could allow China to gain more access to resources and markets and exercise more influence in the Middle East. In this scenario, geography and geoeconomics are destined to counteract geopolitics.

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