China holds the cards: Fertiliser, fuel and the Middle East crisis

The war in Iran has led to energy shortages that are disrupting fertiliser supply chains, creating the risk of a global food crisis. Barely three years after the Covid-19 pandemic, the same kind of panic seen during the worldwide mask shortage is playing out again — only this time, different products and supply chains are sounding the alarm.

This turmoil has given China, as the world’s second-largest fertiliser exporter and one of Asia’s key fuel exporters, at least two cards to play: fertiliser diplomacy and fuel diplomacy.

The longer the war drags on, the more it exposes the incoherence of the US’s Middle East strategy. Not only is the US bogged down, it has also dragged the world into an energy and fertiliser crisis. Having planned ahead on energy and food production, China itself is under less pressure and could deepen cooperation with other countries to plug gaps in fertiliser and fuel supplies, offering greater stability to the world.

In late March, Chinese Premier Li Qiang told the China Development Forum that China is a “cornerstone of certainty” and a “harbour of stability”. Earlier that month, at the Two Sessions foreign ministers’ press conference, Chinese Foreign Minister Wang Yi likewise said that Chinese diplomacy provides “stability and certainty to a turbulent world”.

Yet Beijing, perhaps out of concern for its own vast domestic needs, has not seized the moment to push fertiliser or fuel diplomacy in a way that would highlight its role as a global “anchor of stability”.

The Financial Times cited sources which said that China had imposed restrictions on fertiliser and fuel exports after the outbreak of the Iran war. Reuters also reported that Beijing had been ambiguous and had not publicly acknowledged such curbs, as it was focused on shielding its own economy from the impact.

As a result, even countries friendly to China cannot be sure of a stable supply of fertiliser and fuel.

In March, rice farmers in Malaysia faced the prospect of reduced harvests after China’s fertiliser export restrictions pushed urea (nitrogen fertiliser) prices up by more than 50%. The Malaysian government said that as a major palm-oil exporter, it was taking steps to secure fertiliser supplies, as the Middle East conflict and Chinese export restrictions had driven up raw material costs and caused a domestic supply crunch.

Reuters quoted Eric Olander, co-founder of the China Global South Project, who said: “China may offer some ceremonial assistance, but it’s highly unlikely, if not wholly improbable, that it will share any substantive amount of its food, energy, or other reserves with other countries.”

In response to Reuters, on 19 March China’s foreign ministry said Beijing was willing to strengthen coordination and cooperation with Southeast Asian countries to jointly address energy security issues. China is a major producer and consumer of fertiliser and an important player in international fertiliser trade, and while meeting domestic demand, it has also exported some fertiliser to global markets.

Though China has not been aggressively shipping out its reserves during the global crisis, the cards it holds have clearly become strategic resources with geopolitical weight.

With the Strait of Hormuz blocked, Southeast Asian countries that are heavily dependent on Middle Eastern oil and gas have been hit first, and hit hard.

The Malaysian government has announced that civil servants will work from home from 15 April to save fuel. Several Vietnamese airlines have cut both domestic and international flights, with reductions of more than 50% in some cases. In Cambodia, more than 2,000 petrol stations were at one point shut down or suspended operations.

Meanwhile, the Philippines has become the first country in the world to declare a state of national energy emergency, with government departments shifting to a four-day work week.

Philippines-China relations have long been strained over sovereignty disputes in the South China Sea. In late March, Philippine President Marcos Jr unexpectedly stated that a “reset” in bilateral relations may be inevitable as the global geopolitical landscape continues to evolve. He added that escalating tensions in the Middle East have triggered a global oil and energy crisis, which could present an “impetus” for the Philippines to reach an agreement on joint energy exploration in the South China Sea.

After meeting with Chinese ambassador to the Philippines Jing Quan, Philippine Agriculture Secretary Francisco Tiu Laurel Jr said China had given assurance that it would not restrict fertiliser exports to the Philippines. The Chinese side, however, offered only a brief statement, saying that the two sides exchanged views on agriculture cooperation. The two countries subsequently held a meeting of the bilateral consultation mechanism on the South China Sea, along with a new round of diplomatic talks.

China-Philippines relations have long been frozen, yet an energy crisis has unexpectedly created an opening for a thaw, with Beijing clearly in the driving seat, holding cards in hand to play. Going back to the beginning, Trump was in fact the one who provided this opportunity. Even if both sides fail to reach any major agreement, at least it shows that what appears to be an intractable deadlock can still move, given sufficient impetus.

China’s early efforts to shore up safeguards for energy, food and fertiliser security have proven the pursuit of strategic autonomy entirely sound — not only creating a buffer for itself, but also enhancing its leverage in external negotiations. On the other hand, in stark contrast, the US’s attack on Iran has not only failed to bring about regime change, but has also prompted Tehran to use the Strait of Hormuz as a last-ditch bargaining chip, dragging the world down with it and leaving Washington struggling to find a way out.

Before the Iran conflict broke out, the ASEAN Studies Centre at the ISEAS-Yusof Ishak Institute in Singapore conducted a survey asking which side ASEAN should choose if forced to align with either China or the US. The result came as no surprise. 

Beijing was seen more favourably among ASEAN member states for the second time, with support reaching 52%, 1.5 percentage points higher than in 2024, when it first surpassed the US. The US, by contrast, saw greater support in 2020-2023 and again in 2025.

Although the report shows that China remains the most influential power for ASEAN in both economic (55.9%) and political-strategic (40.0%) terms, there is only 13.6% regional confidence that it can maintain the rules-based order. As for China’s role as a strategic leader of the “Global South”, ASEAN countries generally take a cautiously optimistic view, far from offering overwhelming endorsement.

Amid global supply chain strains triggered by conflict in the Middle East, China is following the “oxygen mask rule”, prioritising domestic needs over international cooperation, which is entirely understandable. As for whether it will be regarded as a strategic leader, that is a matter for later.

This article was first published in Lianhe Zaobao as “美国“送”中国几张牌”.

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