Speaker 1: Bloomberg Audio Studios, podcasts, radio news, and I want to
Speaker 1: thank you for joining us at the conclusion of a
Speaker 1: highly productive NATO summit in the Netherlands.
Speaker 2: I want to thank them for.
Speaker 1: The today's NATO summit in the Netherlands. President Trump fielded
Speaker 1: questions from reporters about Israel and Iran and the next
Speaker 1: steps in the conflict. Matthew, are you interested in restarting
Speaker 1: negotiations with Iran? You just said you believe the conflict
Speaker 1: between Israel and Iran is over. What makes you so
Speaker 1: confident it is? Are you relying on Israeli intelligence for
Speaker 1: your assessment of Negotiations with Iran are ongoing and talks
Speaker 1: are expected to take place next week. But there's been
Speaker 1: another thing on Trump's mind.
Speaker 2: Yesterday you said China canal continue to purchase oil from Iran.
Speaker 1: Iranian oil from the podium, Trump expanded on some thing
Speaker 1: he'd posted on truth social a day earlier.
Speaker 3: They're the oil business. I mean I could stop it
Speaker 3: if I wanted. I could sell China the oil myself.
Speaker 2: I don't want to do that.
Speaker 3: They're going to need money to put that country back
Speaker 3: into shape.
Speaker 1: We want to see that China can continue buying oil
Speaker 1: from Iran.
Speaker 2: China is gonna want to buy oil. They can buy
Speaker 2: it from US, they can buy it from.
Speaker 1: Other people, but you're going to have to put that
Speaker 1: country back into shape.
Speaker 2: It needs, desperately needs money.
Speaker 1: China is Iran's biggest trading partner and sources about fourteen
Speaker 1: percent of its oil from the country. Between China's economic
Speaker 1: relationship with Iran and its ongoing trade negotiations with the US,
Speaker 1: the conflict between Israel and Iran, and especially US involvement,
Speaker 1: has put China in a difficult position.
Speaker 3: Beijing, meanwhile, has criticized a US strike on Iranian nuclear facilities,
Speaker 3: saying again it's willing to join international efforts to restore
Speaker 3: peace in the Middle East.
Speaker 1: China, like many countries, also buys oil from Iran's neighbors
Speaker 1: that passes through the Strait of Hormots, which Iran has
Speaker 1: threatened to shut down. On Sunday, Secretary of State Marco
Speaker 1: Rubio spoke with Fox News and called on China to
Speaker 1: apply pressure to Iran when it comes to the Strait.
Speaker 3: I encourage the Chinese government in Beijing to call them
Speaker 3: about that, because they heavily depend on the Straits or
Speaker 3: hormones for their oil. If they do that, it'll be
Speaker 3: another terribleness. They gets economic suicide for them if they
Speaker 3: do it.
Speaker 1: My Big Take Asia co host Juan Ha spoke with
Speaker 1: our colleague John Lou who oversees coverage of China from Beijing.
Speaker 1: They talked about what the Israel Iran conflict has revealed
Speaker 1: about China's influence in the Middle East and where China's
Speaker 1: economic relationship with Iran could go from here.
Speaker 3: I would expect China to take advantage of the situation
Speaker 3: in that it will point to the United States and say, look,
Speaker 3: the US is providing arms to Israel and those arms
Speaker 3: are being used to create instability in the Middle East.
Speaker 3: And I think the Chinese will primarily use the situation
Speaker 3: as a way of painting the United States as the
Speaker 3: unreliable global partner.
Speaker 1: This is the Big Take Asia from Bloomberg News. I'm
Speaker 1: Sarah Holder with One Ha in Hong Kong today on
Speaker 1: the show What's at stake for China in Iran and
Speaker 1: how the conflict could change China's game plan not just
Speaker 1: in the Middle East but on the global stage.
Speaker 2: John, thanks so much for joining us.
Speaker 3: It's a pleasure to be here.
Speaker 2: John, we're speaking on Tuesday afternoon. What do we know
Speaker 2: about how the Chinese leadership views this conflict in the
Speaker 2: Middle East and the US involvement in it.
Speaker 3: First and foremost, I think the number one priority on
Speaker 3: chijing pings to do list is the economy. And even
Speaker 3: though China is not as much involved in this conflict
Speaker 3: as many countries in the Middle East and closer to
Speaker 3: the Middle East are, it is affected economically. It gets
Speaker 3: a notable amount of energy from your It gets a
Speaker 3: lot of energy from the Middle East. Chinese companies are
Speaker 3: doing business in the Middle East, the electric car companies,
Speaker 3: for example, and so if anything, Beijing would like to
Speaker 3: see everybody get back to business.
Speaker 2: China condemned the US attacks on Iran's nuclear facilities and
Speaker 2: pushed a ceasefire proposal at the United Nations. How consistent
Speaker 2: is that with China's foreign policy approach when it comes
Speaker 2: to conflicts.
Speaker 3: One of the things that China has tried to do
Speaker 3: over the last couple of years, especially with President Trump's
Speaker 3: return to office, is really portray itself as being this
Speaker 3: champion of the developing world of the Global South, and
Speaker 3: they have used conflicts like the one between Israel and
Speaker 3: Hamas and Gaza and now with Iran to try to
Speaker 3: portray itself as being the responsible player on the global
Speaker 3: stage and the United States as being less responsible, as
Speaker 3: being the one who is causing chaos, taking actions that
Speaker 3: are disrupting trade, causing death and destruction in the Middle East.
Speaker 2: China and Iran have a long history of cooperation, solidified
Speaker 2: during the Iran Iraq War in the nineteen eighties, and
Speaker 2: China is one of Iran's biggest supplier of arms. In
Speaker 2: recent years, China's invested in Iranian infrastructure, telecommunications, and energy sectors,
Speaker 2: and the two countries signed a twenty five year cooperation
Speaker 2: agreement to strengthen their economic and political alliance. John how
Speaker 2: important is China to Iran's economy and vice versa.
Speaker 3: There is, I would say, an alignment of interest between
Speaker 3: these two nations. They both are seeking alternative paths to
Speaker 3: economic development that may have been shut off or stymied
Speaker 3: by the United States or the West. In general, I
Speaker 3: would say China is far more important to the Iranian
Speaker 3: economy than Iran is to the Chinese economy. China is
Speaker 3: the major buyer of Iranian oil that is a crucial
Speaker 3: source of income for the regime in Tehran. The data
Speaker 3: that we've seen from third party consultants, people who track
Speaker 3: this data, China was buying about one point one million
Speaker 3: barrels of oil from Iran a day in the month
Speaker 3: of May this year. That's down about twenty percent, but
Speaker 3: it accounts for about ten percent of how much oil
Speaker 3: China is buying every month. China's buying about eleven twelve
Speaker 3: million barrels of oil a day, and about one million
Speaker 3: plus comes from Tehran, so it is important. Ten percent
Speaker 3: is a lot, but it is not so high that
Speaker 3: Beijing is dependent on that oil as being the main
Speaker 3: driver of its economic growth.
Speaker 2: Last November, Bloomberg investigation detailed how billions of dollars of
Speaker 2: sanctioned Iranian oil is getting into China, even though on
Speaker 2: paper the country hasn't imported a single drop since mid
Speaker 2: twenty twenty two. How does that oil trade play into
Speaker 2: the geopolitical tensions with the US.
Speaker 3: It plays into the geopolitical tensions with the US because
Speaker 3: the United States is trying to cut off income to
Speaker 3: the Iranian regime, and so if there are buyers of
Speaker 3: that oil even though the sanctions are in place, that
Speaker 3: is undermining the purpose of those sanctions being put into place,
Speaker 3: and so if Washington could put pressure on Beijing to
Speaker 3: buy less Iranian oil, that would increase the leverage that
Speaker 3: potentially Washington would have with Tehran at the bargaining table.
Speaker 2: Now, about twenty percent of global oil goes through the
Speaker 2: Strait of Hormuse every day. The strait is between Iran,
Speaker 2: Oman and the United Arab Emirates. It's one of the
Speaker 2: world's busiest oil shipping channels. The US asked China to
Speaker 2: urge Iran to not close the straight after the US
Speaker 2: bombed Iran's nuclear facilities over the weekend. What does that
Speaker 2: say about China's influence over Iran and its role in
Speaker 2: this conflict.
Speaker 3: China's influence on Iran, I think is very well known
Speaker 3: and pronounced. We have, of course, had China mediating return
Speaker 3: to normal diplomatic ties between Iran and Saudi Arabia a
Speaker 3: couple of years ago, and China could play that role
Speaker 3: because of the relationship that it has with both Saudi
Speaker 3: and Iran. And so I think there is influence. How
Speaker 3: much of it that Beijing is willing to use or deploy,
Speaker 3: I think that is hard to know. I think though
Speaker 3: that Also, Iran knows China needs the oil to keep going,
Speaker 3: and I don't think Iran necessarily needs Beijing to remind
Speaker 3: it that the Strait of Hormus is very important to Beijing.
Speaker 3: I think that's very clear to the Iranians. And you know,
Speaker 3: Iran also wants to sell that oil. It needs the
Speaker 3: income to come in, and so there's many many factors
Speaker 3: that Tehran would have to consider before it shut that straight.
Speaker 2: That seems unlikely at this point. But if China's access
Speaker 2: to Iranian oil was cut off some other way, where
Speaker 2: would China get its oil?
Speaker 3: I mean, the other place is that China buys a
Speaker 3: lot of its energy from flood Saudi Arabia, include Russia
Speaker 3: and those places. I'm sure, given the current global environment
Speaker 3: in terms of energy supplies, would be more than willing
Speaker 3: to ramp up their provisions to the Chinese market. The
Speaker 3: other thing is China is actually getting to a point
Speaker 3: where it's oil demand may be peaking. The International Energy
Speaker 3: Agency predicted that oil demand from China would peak in
Speaker 3: twenty twenty seven, so that's very close. In the broader picture,
Speaker 3: China is really investing in solar and wind and alternative
Speaker 3: energies because it sees that as the future. But also
Speaker 3: the economy is not doing that great, which means demand
Speaker 3: is not growing that quickly.
Speaker 2: Now I want to put it into stark terms, John,
Speaker 2: without oil, what use then is Iran to China without oil?
Speaker 3: I think there is a diplomatic advantage in having friends
Speaker 3: in the Middle East for China. China wants to portray
Speaker 3: itself as the champion of the developing world and being
Speaker 3: able to point to Tehran. Being able to show that
Speaker 3: it's helped a neighbor develop, being able to show it's
Speaker 3: given support to this country in the Middle East does
Speaker 3: help China and its relationship with other parts of the world,
Speaker 3: and so there are additional benefits to China in addition
Speaker 3: to oil.
Speaker 2: With a weekend Iran, where does that leave China's influence
Speaker 2: in the Middle East. That's after the break After the
Speaker 2: US bombed Iran's nuclear facilities, you had Saudi Arabia, Qatar
Speaker 2: and other Persian Gulf countries express dismay over the attack.
Speaker 2: Given that China has been a supporter of Iran and
Speaker 2: Iran is now on the back foot because of this conflict,
Speaker 2: does this in any way dent China's influence.
Speaker 3: I think it the put in some questions about some
Speaker 3: of these organizations that China has been a part of.
Speaker 3: So I'm thinking of the Shahai Cooperation Organization, which Iran
Speaker 3: is a member of. It includes China, includes Russia, and
Speaker 3: these are meant to be groupings that are supposed to
Speaker 3: help country members with creating an alliance of like minded states.
Speaker 3: I think the fact that these groupings have not been
Speaker 3: able to step in and help Iran as it was
Speaker 3: under attack from foreign forces will make them less compelling
Speaker 3: of a grouping for other countries to join. Where do
Speaker 3: we secure our security if we cannot secure it by
Speaker 3: aligning ourselves with China or aligning ourselves with Russia. I
Speaker 3: think that ultimately underlines the idea that it is really
Speaker 3: the United States alone that is a global power with
Speaker 3: reach anywhere around the world.
Speaker 2: And of course, in this conflict, we've seen that the
Speaker 2: US is willing to insert itself into Israel's war against Iran.
Speaker 2: How might China be viewing this in relation to Taiwan
Speaker 2: right in its own backyard, which the US, through a
Speaker 2: congressional act, provides defensive arms.
Speaker 3: To the focus of Chinese military planners has always been
Speaker 3: what to do in case of a conflict over Taiwan.
Speaker 3: I don't think the US bombing of the nuclear sites
Speaker 3: in Iran changes Chinese calculation about how to respond to
Speaker 3: some sort of provocation about Taiwan, or how to respond
Speaker 3: if there was a conflict in the United States did
Speaker 3: intervene in that conflict. The United States does sail warships
Speaker 3: through the Taiwan Strait on a regular basis in the
Speaker 3: South China Sea. There are American bases in Japan, in Korea,
Speaker 3: in the Philippines, on Guam, and so I would expect
Speaker 3: that Chinese military planners have considered all potential possibilities and
Speaker 3: are planning for them. But I don't think this changes
Speaker 3: the view that China has of Taiwan in any substantial way.
Speaker 2: Iran will likely need help rebuilding. Will China step up
Speaker 2: and consolidate its relationship with Iran and its presence in
Speaker 2: the Middle East? Or do you think it's more likely
Speaker 2: that it would step back and see what happens in
Speaker 2: the region.
Speaker 3: I think immediately China will wait and see how things
Speaker 3: sort of unfold. I think in the Median term, there
Speaker 3: would be definite interests not only by the Chinese government
Speaker 3: but lots of Chinese companies and helping to invest and rebuild.
Speaker 3: There will obviously be American sanctions. There are already on
Speaker 3: what businesses can do in Iran. There may be more
Speaker 3: to come, and so this will depend on how discussions
Speaker 3: between the US and Tehran go. But if those sanctions
Speaker 3: were to loosen it all, I think you would say,
Speaker 3: see a lot of Chinese interests in helping to rebuild
Speaker 3: Iranian infrastructure, probably not in nuclear nuclear especially as it
Speaker 3: relates to defense or weapons related technologies, that that would
Speaker 3: be I imagine something Beijing would be extremely careful about touching.
Speaker 2: It was President Donald Trump who first announced the ceasefire
Speaker 2: between Israel and Iran. China has been largely on the
Speaker 2: sidelines of this conflict. What does the US involvement in
Speaker 2: China's response tell us about their rivalry to influence and
Speaker 2: shape world geopolitics?
Speaker 3: You know, the narrative we've had for many years has
Speaker 3: been about how quickly China is catching up to the
Speaker 3: United States. And we hear that when it comes to GDP,
Speaker 3: when it comes to trade, when it comes to manufacturing,
Speaker 3: when it comes to AI and technology and chips. What
Speaker 3: this episode I think shows is actually how big the
Speaker 3: gap remains when it comes to to the thing that
Speaker 3: matters the most when it comes to geopolitics on the
Speaker 3: global stage, which is military capability. There is nowhere in
Speaker 3: the world that the US cannot touch if it's so desired.
Speaker 3: And the United States has also shown that when its
Speaker 3: interests are infringed, when its interests are at staked, is
Speaker 3: willing to take those actions. Those are things that cannot
Speaker 3: be said about China, and I think it underlines how
Speaker 3: big the power differential remains between these two countries.
Speaker 2: This is The Big Take Asia from Bloomberg News. I'm wanha.
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Speaker 2: Thanks for listening, See you next time.