China is not feeling the shock of war in the Middle East – yet. But it is feeling the ripples.
In the short-term, it has enough oil supplies for several months, after which it could turn to neighbour Russia for help. But China will be calculating what this could mean long-term – not just for its investments in the Middle East, but also for its ambitions.
This week, thousands of Communist Party delegates are meeting in Beijing to discuss a roadmap for the world’s second-largest economy as it continues to battle low consumption, a prolonged property crisis and huge local debt.
On Thursday, China lowered its annual economic growth target to the lowest level since 1991, even as Beijing continues its rapid development of high-tech and renewables industries.
China may have hoped to export its way out of economic trouble. But it has spent a year fighting a trade war with the United States, and now faces the prospect of upheaval in the Middle East, which supplies both its major shipping routes and a lot of its energy needs.
The longer the war drags on, the more it could hurt, especially if traffic through the Strait of Hormuz remains blocked.
“A prolonged period of turmoil and insecurity in the Middle East will disrupt other regions of importance for China,” says Philip Shetler-Jones from the Royal United Services Institute.
“African economies, for instance, have been the beneficiary of substantial and steady flows of Gulf capital. If the investment tide goes out, this risks wider instability that undermines the sustainability of China’s broader and longer-term interests.”
That is, given China’s global footprint, its investments and markets beyond the Middle East are also vulnerable to a protracted war. And like so many other countries, China too is wary of this fresh bout of unpredictability.
“I think China is thinking the same as everyone else,” says Professor Kerry Brown, director of the China Lau Institute at King’s College London.
“What is the game plan? Surely the Americans didn’t go into this with no game plan.”
But then, he adds: “Probably, along with everyone else, they would also be thinking, oh God, they really have gone into this with no plan at all. Right, we don’t want to get dragged into this like we don’t want to get dragged into anything else, but we also need to do something.”
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