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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: In a series of posts on truth Social Tuesday morning,

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Speaker 2: Donald Trump celebrated the fragile ceasefire between Iran and Israel.

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Speaker 3: Presida.

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Speaker 4: Trump has announced that sees fire agreement between Israel and Iran,

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Speaker 4: saying end it's the.

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Speaker 3: Twelve days of war. He says a truce is scheduled

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Speaker 3: to take effect in about five hours time.

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Speaker 2: And highlighted what he saw as one of the benefits

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Speaker 2: of peace, China can now continue to purchase oil from Iran.

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Speaker 3: After President Trump says that China can buy Iranian oil.

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Speaker 1: You can see we're trading below sixty eight dollars a barrel.

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Speaker 2: Now we pop hopefully, Trump added in his post, they

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Speaker 2: will be purchasing plenty from the US. Also, China is

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Speaker 2: Iran's biggest trading partner and sources about fourteen percent of

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Speaker 2: its oil from the country. Between China's economic relationship with

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Speaker 2: Iran and its ongoing trade and botiations with the US,

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Speaker 2: America's strike against Iran has put China in a difficult position.

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Speaker 3: Beijing, meanwhile, has criticized a US strike on Iranian nuclear facilities,

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Speaker 3: saying again it's willing to join international efforts to restore

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Speaker 3: peace in the Middle East.

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Speaker 2: China, like many countries, also buys oil from Iran's neighbors

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Speaker 2: that passes through the Strait of Hormoots, which Iran has

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Speaker 2: threatened to shut down. On Sunday, Secretary of State Marco

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Speaker 2: Rubio spoke with Fox News and called on China to

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Speaker 2: apply pressure to Iran when it comes to the Strait.

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Speaker 1: I to encourage the Chinese government in Beijing to call

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Speaker 1: him about that, because they heavily depend on the Straits

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Speaker 1: or Hormones for their oil. If they do that, it'll

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Speaker 1: be another terrible mistake. Its economic suicide for them if

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Speaker 1: they do it.

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Speaker 2: My Big Take Asia co host Juan Ha spoke with

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Speaker 2: our colleague John Lou who oversees coverage of China from Beijing.

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Speaker 2: They talked about what the Israel Iran conflict has revealed

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Speaker 2: about China's influence in the Middle East and where China's

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Speaker 2: economic relationship with Iran could go from here.

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Speaker 4: I would expect China to take advantage of the situation

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Speaker 4: in that it will point to the United States and say, look,

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Speaker 4: the US is providing arms to Israel and those arms

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Speaker 4: are being used to create instability in the Middle East,

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Speaker 4: and I think the Chinese will primarily use the situation

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Speaker 4: as a way of painting the United States as the

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Speaker 4: unreliable global partner.

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Speaker 2: This is the Big Take Asia from Bloomberg News. I'm

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Speaker 2: Sarah Holder with one Ha in Hong Kong today on

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Speaker 2: the show What's at Stake for China in Iran and

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Speaker 2: how the conflict could change China's game plan not just

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Speaker 2: in the Middle East but on the global stage.

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Speaker 3: John, thanks so much for joining us.

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Speaker 4: It's a pleasure to be here.

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Speaker 3: John. We're speaking on Tuesday afternoon. What do we know

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Speaker 3: about how the Chinese leadership views this conflict in the

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Speaker 3: Middle East and the US involvement in it?

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Speaker 4: First and foremost, I think the number one priority on

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Speaker 4: chijing pings to do list is the economy. And even

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Speaker 4: though China is not as much involved in this conflict

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Speaker 4: as many countries in the Middle East and closer to

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Speaker 4: the Middle East are, it is affected economically. It gets

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Speaker 4: a notable amount of energy from Iran, It gets a

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Speaker 4: lot of energy from the Middle East. Chinese companies are

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Speaker 4: doing business in the Middle East, the electric car companies

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Speaker 4: for example, and so if anything, Beijing would like to

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Speaker 4: see everybody get back to business.

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Speaker 3: China condemned the US attacks on Iran's nuclear facilities and

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Speaker 3: pushed a ceasefire proposal at the United Nations. How consistent

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Speaker 3: is that with China's foreign policy approach when it comes

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Speaker 3: to conflicts.

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Speaker 4: One of the things that China has tried to do

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Speaker 4: over the last couple of years, especially with President Trump's

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Speaker 4: return to office, is really portray itself as being this

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Speaker 4: champion of the developing world, of the global South, and

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Speaker 4: they have used conflicts like the one between Israel and

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Speaker 4: Hamas and Gaza and now with Iran to try to

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Speaker 4: portray itself as being the responsible player on the global stage,

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Speaker 4: and the United States as being less responsible, as being

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Speaker 4: the one who is causing chaos, taking actions that are

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Speaker 4: disrupting trade, causing death and destruction in the Middle East.

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Speaker 3: China and Iran have a long history of cooperation, solidified

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Speaker 3: during the Iran Iraq War in the nineteen eighties, and

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Speaker 3: China is one of Iran's biggest supplier of arms. In

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Speaker 3: recent years, China's invested in Iranian infrastructure, telecommunications, and energy sectors,

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Speaker 3: and the two countries signed a twenty five year cooperation

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Speaker 3: agreement to strengthen their economic and political alliance. John, how

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Speaker 3: important is China to Iran's economy and vice versa.

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Speaker 4: There is I would say an alignment of interest between

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Speaker 4: these two nations. They both are seek looking alternative paths

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Speaker 4: to economic development that may have been shut off or

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Speaker 4: stymied by the United States or the West. In general,

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Speaker 4: I would say China is far more important to the

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Speaker 4: Iranian economy than Iran is to the Chinese economy. China

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Speaker 4: is the major buyer of Iranian oil that is a

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Speaker 4: crucial source of income for the regime in Tehran. The

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Speaker 4: data that we've seen from third party consultants, people who

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Speaker 4: track this data, China is buying about one point one

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Speaker 4: million barrels of oil from Iran a day in the

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Speaker 4: month of May this year. That's down about twenty percent,

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Speaker 4: but it accounts for about ten percent of how much

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Speaker 4: oil China is buying every month. China's buying about eleven

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Speaker 4: twelve million barrels of oil a day, and about one

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Speaker 4: million plus comes from Tehran, so it is important. Ten

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Speaker 4: percent is a lot, but it is not so high

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Speaker 4: that Beijing is dependent on that oil as being the

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Speaker 4: main driver of its economic growth.

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Speaker 3: Last November, a Bloomberg investigation detailed how billions of dollars

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Speaker 3: of sanctioned Iranian oil is getting into China, even though

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Speaker 3: on paper the country hasn't imported a single drop since

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Speaker 3: mid twenty twenty two. How does that oil trade play

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Speaker 3: into the geopolitical tensions with the US?

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Speaker 4: It plays into the geopolitical tensions with the US because

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Speaker 4: the United States is trying to cut off income to

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Speaker 4: the Iranian regime, and so if there are buyers of

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Speaker 4: that oil even though the sanctions are in place, that

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Speaker 4: is undermining the purpose of those sanctions being put into place.

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Speaker 4: And so if Washington could put pressure on Beijing to

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Speaker 4: buy less Iranian oil, that would increase the leverage that

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Speaker 4: potentially Washington would have with Tehran at the bargaining table.

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Speaker 3: Now, about twenty percent of global oil goes through the

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Speaker 3: Strait of Hormuse every day. The strait is between Iran,

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Speaker 3: Oman and the United Arab Emirates. It's one of the

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Speaker 3: world's busiest oil shipping channels. The US asked China to

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Speaker 3: urge Iran to not close the straight after the US

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Speaker 3: bombed Iran's nuclear facilities over the weekend. What does that

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Speaker 3: say about China's influence over Iran and its role in

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Speaker 3: this conflict.

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Speaker 4: China's influence on Iran, I think is very well known

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Speaker 4: and pronounced. We have, of course, had China mediating return

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Speaker 4: to normal diplomatic ties between Iran and Saudi Arabia a

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Speaker 4: couple of years ago, and China could play that role

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Speaker 4: because of the relationship that it has with both Saudi

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Speaker 4: and Iran, and so I think there is influence. How

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Speaker 4: much of it that Beijing is willing to use or deploy,

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Speaker 4: I think that is hard to know. I think though,

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Speaker 4: that also Iran knows China needs the oil to keep going,

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Speaker 4: and I don't think Iran necessarily needs Beijing to remind

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Speaker 4: it that the Strait of Hormus is very important to Beijing.

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Speaker 4: I think that's very clear to the Iranian And you know,

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Speaker 4: Iran also wants to sell that oil. It needs the

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Speaker 4: income to come in, and so there's many many factors

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Speaker 4: that Tehran would have to consider before it shut that straight.

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Speaker 3: That seems unlikely at this point. But if China's access

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Speaker 3: to Iranian oil was cut off some other way, where

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Speaker 3: would China get its oil?

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Speaker 4: I mean, the other places that China buys a lot

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Speaker 4: of its energy from include Saudi Arabia, include Russia and

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Speaker 4: those places. I'm sure, given the current global environment in

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Speaker 4: terms of energy supplies, would be more than willing to

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Speaker 4: ramp up their provisions to the Chinese market. The other

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Speaker 4: thing is China is actually getting to a point where

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Speaker 4: it's oil demand may be peaking. The International Energy Agency

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Speaker 4: predicted that oil demand from China would peak in twenty

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Speaker 4: twenty seven, so that's very close. In the broader picture,

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Speaker 4: China is really investing in solar and wind and alternative

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Speaker 4: energies because it sees that as the future, but also

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Speaker 4: the economy is not doing that great, which means demand

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Speaker 4: is not growing that quickly.

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Speaker 3: Now I want to put it into stark terms, John

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Speaker 3: without oil, what use then is Iran to China without oil?

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Speaker 4: I think there is a diplomatic advantage in having friends

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Speaker 4: in the Middle East for China. China wants to portray

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Speaker 4: itself as the champion of the developing world and being

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Speaker 4: able to point to Tehran, being able to show that

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Speaker 4: it's helped a neighbor develop, being able to show it's

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Speaker 4: given support to this country in the Middle East does

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Speaker 4: help China in its relationship with other parts of the world,

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Speaker 4: and so there are additional benefits to China in addition

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Speaker 4: to oil with a weekend Iran.

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Speaker 3: Where does that leave China's influence in the Middle East?

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Speaker 3: That's after the break after the US bombed Iran's nuclear facilities,

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Speaker 3: you had Saudi Arabia, Qatar and other Persian Gulf countries

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Speaker 3: express dismay over the attack. Given that China has been

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Speaker 3: a supporter of Iran and Iran is now on the

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Speaker 3: back foot because of this conflict, does this in any

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Speaker 3: way dent China's influence?

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Speaker 4: I think it does put in some questions about some

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Speaker 4: of these organizations that China has been a part of.

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Speaker 4: So I'm thinking of the Shahai Cooperation Organization, which Iran

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Speaker 4: is a member of. It includes China, includes Russia, and

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Speaker 4: these are meant to be groupings that are supposed to

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Speaker 4: help country members with creating an alliance of like minded states.

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Speaker 4: I think the fact that these groupings have not been

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Speaker 4: able to step in and help Iran as it was

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Speaker 4: under attack from foreign forces will make them less compelling

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Speaker 4: of a grouping for other countries to join. Where do

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Speaker 4: we secure our security if we cannot secure it by

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Speaker 4: aligning ourselves with China or aligning ourselves with Russia. I

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Speaker 4: think that ultimately underlines the idea that it is really

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Speaker 4: the United States alone that is a global power with

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Speaker 4: reach anywhere around the world.

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Speaker 3: And of course, in this conflict, we've seen that the

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Speaker 3: US is willing to insert itself into Israel's war against Iran.

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Speaker 3: How might China be viewing this in relation to Taiwan

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Speaker 3: right in its own backyard, which the US, through a

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Speaker 3: congressional act provides defensive arms to.

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Speaker 4: The focus of Chinese military planners has always been what

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Speaker 4: to do in case of a conflict over Taiwan. I

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Speaker 4: don't think the US bombing of the nuclear sites in

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Speaker 4: Iran changes Chinese calculation about how to respond to some

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Speaker 4: sort of provocation about Taiwan, or how to respond if

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Speaker 4: there was a conflict in the United State it did

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Speaker 4: intervene in that conflict. The United States does sail warships

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Speaker 4: through the Taiwan Straight on a regular basis in the

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Speaker 4: South China Sea. There are American bases in Japan, in Korea,

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Speaker 4: in the Philippines, on Guam, and so I would expect

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Speaker 4: that Chinese military planners have considered all potential possibilities and

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Speaker 4: are planning for them. But I don't think this changes

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Speaker 4: the view that China has of Taiwan in any substantial way.

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Speaker 3: Iran will likely need help rebuilding. Will China step up

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Speaker 3: and consolidate its relationship with Iran and its presence in

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Speaker 3: the Middle East? Or do you think it's more likely

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Speaker 3: that it would step back and see what happens in

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Speaker 3: the region.

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Speaker 4: I think immediately China will wait and see how things

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Speaker 4: sort of unfold. I think in a median term, there

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Speaker 4: would be definite interests not only by the Chinese government

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Speaker 4: but lots of Chinese companies and helping to invest and rebuild.

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Speaker 4: There will obviously be American sanctions. There are already on

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Speaker 4: what businesses can do in Iran. There may be more

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Speaker 4: to come, and so this will depend on how discussions

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Speaker 4: between the US and Tehran go. But if those sanctions

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Speaker 4: were to loosen it all, I think you would see

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Speaker 4: a lot of Chinese interests in helping to rebuild Iranian infrastructure.

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Speaker 4: Probably not in nuclear nuclear especially as it relates to

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Speaker 4: defense or weapons related technologies. That that would be I imagine

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Speaker 4: something Beijing would be extremely careful about touching.

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Speaker 3: It was President Donald Trump who first announced the ceasefire

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Speaker 3: between Israel and Iran. China has been largely on the

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Speaker 3: sidelines of this conflict. What does the US involvement in

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Speaker 3: China's response tell us about their rivalry to influence and

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Speaker 3: shape world geopolitics.

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Speaker 4: You know, the narrative we've had for many years has

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Speaker 4: been about how quickly China is catching up to the

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Speaker 4: United States. And we hear that when it comes to GDP,

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Speaker 4: when it comes to trade, when it comes to manufacturing,

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Speaker 4: when it comes to AI and technology and chips. What

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Speaker 4: this episode I think shows is actually how big the

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Speaker 4: gap remains when it comes to the thing that matters

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Speaker 4: the most when it comes to geopolitics on the global stage,

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Speaker 4: which is military capability. There is nowhere in the world

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Speaker 4: that the US cannot touch if it's so desired. And

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Speaker 4: the United States has also shown that when its interests

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Speaker 4: are infringed, when its interests are at staked, is willing

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Speaker 4: to take those actions. Those are things that cannot be

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Speaker 4: said about China, and I think it underlines how big

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Speaker 4: the power differential remains between these two countries.

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Speaker 3: This is the Big Take Asia from Bloomberg News. I'm

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