1 00:00:02,440 --> 00:00:09,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. I'm Stephen Carroll, and 2 00:00:09,800 --> 00:00:12,120 Speaker 1: this is Here's Why, where we take one new story 3 00:00:12,160 --> 00:00:14,159 Speaker 1: and explain it in just a few minutes with our 4 00:00:14,200 --> 00:00:15,680 Speaker 1: experts Here at Bloomberg. 5 00:00:20,960 --> 00:00:25,639 Speaker 2: We've taken out top military commanders, senior nuclear scientists, the 6 00:00:25,680 --> 00:00:31,280 Speaker 2: Islamic regime's most significant enrichment facility, and a large portion 7 00:00:31,360 --> 00:00:34,920 Speaker 2: of its ballistic missile arsenal. More is on the way. 8 00:00:35,280 --> 00:00:38,239 Speaker 1: The escalation in the conflict between Iran and Israel has 9 00:00:38,280 --> 00:00:41,760 Speaker 1: sent shockwaves across the Middle East and through global markets. 10 00:00:42,159 --> 00:00:44,159 Speaker 1: While much of the focus has been on the United 11 00:00:44,200 --> 00:00:48,479 Speaker 1: States role, there's another economic powerhouse that's watching closely. As 12 00:00:48,479 --> 00:00:51,680 Speaker 1: Middle East energy expert Alan Wald explains. 13 00:00:51,560 --> 00:00:55,200 Speaker 3: China is a really big player. China is basically the 14 00:00:55,280 --> 00:00:58,480 Speaker 3: largest customer for these Persian golf producers that includes Iran 15 00:00:58,520 --> 00:01:01,560 Speaker 3: and Saudi Arabia and other And you don't want to 16 00:01:01,680 --> 00:01:04,640 Speaker 3: kick the nest when it comes to China. China is 17 00:01:04,720 --> 00:01:07,120 Speaker 3: not going to like it if their ships are disrupted, 18 00:01:07,160 --> 00:01:09,160 Speaker 3: if there are access to oil is disrupted. 19 00:01:09,440 --> 00:01:12,360 Speaker 1: So here's why China is a key player in the 20 00:01:12,480 --> 00:01:20,559 Speaker 1: Israel Iran conflict. Our Greater China Executive editor John Lewell 21 00:01:20,600 --> 00:01:24,080 Speaker 1: joins us now for more John, First of all, how 22 00:01:24,120 --> 00:01:26,360 Speaker 1: important is Iran to China. 23 00:01:26,959 --> 00:01:31,119 Speaker 4: China is the world's largest importer of oil and needs 24 00:01:31,160 --> 00:01:35,839 Speaker 4: that oil to power its economy. That economy has been weak. 25 00:01:36,000 --> 00:01:41,080 Speaker 4: It's been struggling with consumer prices, it's been struggling with 26 00:01:41,240 --> 00:01:45,000 Speaker 4: efficiency and productivity. Higher oil prices is not going to 27 00:01:45,040 --> 00:01:48,280 Speaker 4: help that. And volatility upheaval in the Middle East and 28 00:01:48,320 --> 00:01:50,040 Speaker 4: around the world is not going to help. It's not 29 00:01:50,040 --> 00:01:52,400 Speaker 4: going to mean people are going to buy more Chinese exports. 30 00:01:52,920 --> 00:01:56,160 Speaker 4: And so much of the oil that China needs comes 31 00:01:56,200 --> 00:01:59,200 Speaker 4: from the Middle East, And because of American sanctions, China 32 00:01:59,440 --> 00:02:05,360 Speaker 4: is substantially the biggest buyer of Iranian oil, and so 33 00:02:05,480 --> 00:02:06,400 Speaker 4: the sticks are high. 34 00:02:06,600 --> 00:02:09,640 Speaker 1: So a strong economic link then between Iran and China. 35 00:02:09,760 --> 00:02:12,960 Speaker 1: But what about Beijing's relationship with Israel? How close are 36 00:02:12,960 --> 00:02:13,600 Speaker 1: those countries. 37 00:02:14,080 --> 00:02:17,880 Speaker 4: The relationship with Israel is a difficult one at the moment, 38 00:02:17,919 --> 00:02:21,760 Speaker 4: and primarily that is because of how close a relationship 39 00:02:21,840 --> 00:02:24,160 Speaker 4: Israel has with the United States and the fact that 40 00:02:24,400 --> 00:02:27,680 Speaker 4: China and the United States are embroiled in this rivalry. 41 00:02:28,040 --> 00:02:30,760 Speaker 4: And so as part of that rivalry between the US 42 00:02:30,840 --> 00:02:33,560 Speaker 4: and China, China has wanted to present itself on the 43 00:02:33,600 --> 00:02:37,400 Speaker 4: global stage as being a champion of the global South, 44 00:02:37,840 --> 00:02:40,560 Speaker 4: and the Muslim world is a very important part of 45 00:02:40,600 --> 00:02:43,919 Speaker 4: that global South that China wants to get on its side. 46 00:02:43,960 --> 00:02:48,480 Speaker 4: And so whenever there's been a conflict Israel's conduct in Gaza, 47 00:02:48,800 --> 00:02:53,400 Speaker 4: in Lebanon, and now with Iran, China has on the 48 00:02:53,400 --> 00:02:57,440 Speaker 4: global stage stood with the Muslim countries as part of 49 00:02:57,520 --> 00:02:59,919 Speaker 4: this attempt to become this champion of the global South. 50 00:03:00,560 --> 00:03:04,000 Speaker 1: What is Beijing said about this escalation between Iran and 51 00:03:04,120 --> 00:03:05,000 Speaker 1: Israel so far? 52 00:03:05,440 --> 00:03:08,799 Speaker 4: So a day after the bombings in Iran started, a 53 00:03:08,960 --> 00:03:12,240 Speaker 4: Chinese Foreign Minister Wang You called both the foreign ministers 54 00:03:12,280 --> 00:03:16,200 Speaker 4: of Iran and the fore minister of Israel. He told 55 00:03:16,240 --> 00:03:19,720 Speaker 4: the Iranian foreign minister the China condemned the attacks, and 56 00:03:19,760 --> 00:03:23,040 Speaker 4: he told the Israeli foreign minister that China was very 57 00:03:23,040 --> 00:03:26,040 Speaker 4: opposed to the attacks. And so a few days after that, 58 00:03:26,320 --> 00:03:29,560 Speaker 4: President Sheijing Ping came out and said that China was 59 00:03:29,680 --> 00:03:34,120 Speaker 4: deeply worried about the situation in Iran. And in both instances, 60 00:03:34,280 --> 00:03:36,720 Speaker 4: President Chi and Foreign Minister Wang You have come out 61 00:03:36,760 --> 00:03:39,240 Speaker 4: to say that China wants to play a role in 62 00:03:39,280 --> 00:03:44,040 Speaker 4: diplomacy that they do not think diplomacy has been you know, 63 00:03:44,200 --> 00:03:47,440 Speaker 4: lost the way. They still think diplomacy is a way 64 00:03:47,480 --> 00:03:49,520 Speaker 4: that the nuclear issue can be resolved. 65 00:03:50,000 --> 00:03:52,480 Speaker 1: China has been a mediator in the Middle East before 66 00:03:53,040 --> 00:03:55,560 Speaker 1: brokering a deal between Saudi Arabia and Iran and in 67 00:03:55,640 --> 00:03:59,800 Speaker 1: twenty twenty three. Is the region a strategic priority for Chinese? 68 00:04:00,080 --> 00:04:02,720 Speaker 4: I wanna say it is a priority, although I think 69 00:04:02,760 --> 00:04:06,120 Speaker 4: in this instance it will be more difficult for China 70 00:04:06,160 --> 00:04:09,440 Speaker 4: to play the mediator than it was in twenty twenty 71 00:04:09,440 --> 00:04:13,080 Speaker 4: three with Iran and Saudi Arabia, because China has a 72 00:04:13,240 --> 00:04:17,320 Speaker 4: relatively good relationship with both Iran and Saudi Arabia, whereas 73 00:04:17,720 --> 00:04:21,440 Speaker 4: we are just discussing the relationship with Israel and by extension, 74 00:04:21,480 --> 00:04:24,040 Speaker 4: the United States has been much more difficult, and so 75 00:04:24,360 --> 00:04:27,120 Speaker 4: I think there would be much more suspicion on the 76 00:04:27,160 --> 00:04:31,040 Speaker 4: part of Israel and the United States on how fair 77 00:04:31,240 --> 00:04:34,400 Speaker 4: and unbiased the mediator China could be in the situation. 78 00:04:34,760 --> 00:04:38,440 Speaker 1: What should we have learned from how China has responded 79 00:04:38,480 --> 00:04:41,279 Speaker 1: to previous episodes of violence and then at least to 80 00:04:41,440 --> 00:04:44,200 Speaker 1: understand how their response might play out from here. 81 00:04:44,640 --> 00:04:48,440 Speaker 4: I think the response will be limited to rhetoric, and 82 00:04:48,680 --> 00:04:51,680 Speaker 4: I think you will hear a lot of rhetoric coming 83 00:04:51,680 --> 00:04:56,719 Speaker 4: out of Beijing condemning the Israeli attacks, also drawing a 84 00:04:56,800 --> 00:05:00,640 Speaker 4: line between Israel and the United States. But I think 85 00:05:00,680 --> 00:05:06,360 Speaker 4: it will stay at rhetoric because one China has actually 86 00:05:06,480 --> 00:05:09,960 Speaker 4: deeper economic ties with Saudi Arabia and the Gulf States. 87 00:05:10,160 --> 00:05:12,800 Speaker 4: China not only buys energy from those places, but it 88 00:05:12,880 --> 00:05:16,000 Speaker 4: also invests in those places. You have Chinese companies building 89 00:05:16,040 --> 00:05:20,640 Speaker 4: factories there, There's a Chinese self driving company, pony Ai, 90 00:05:20,680 --> 00:05:23,920 Speaker 4: who's putting driverless vehicles on the roads in those countries, 91 00:05:23,960 --> 00:05:27,640 Speaker 4: and so that economic relationship is much deeper than the 92 00:05:27,640 --> 00:05:30,679 Speaker 4: one that China has with Iran. And I think also 93 00:05:30,760 --> 00:05:33,680 Speaker 4: it's important to note that if this conflict results in 94 00:05:33,720 --> 00:05:37,880 Speaker 4: the United States being embroiled and yet another Middle East conflict, 95 00:05:38,320 --> 00:05:40,600 Speaker 4: Beijing's not going to be unhappy about that. 96 00:05:40,960 --> 00:05:44,799 Speaker 1: What could provoke a greater reaction from China in terms 97 00:05:44,839 --> 00:05:46,680 Speaker 1: of defending its links to Iran. 98 00:05:47,240 --> 00:05:52,240 Speaker 4: I think if there was some action directly against the regime, 99 00:05:52,640 --> 00:05:55,919 Speaker 4: that there was an effort to topple the regime, I 100 00:05:55,920 --> 00:06:00,279 Speaker 4: think that would be very sensitive to China, because there 101 00:06:00,400 --> 00:06:04,280 Speaker 4: is the suspicion in Beijing that ultimately that is what 102 00:06:04,279 --> 00:06:07,359 Speaker 4: the United States wants for China as well, regime change, 103 00:06:07,400 --> 00:06:10,080 Speaker 4: and so I think you would see an uptick in 104 00:06:10,120 --> 00:06:12,640 Speaker 4: the rhetoric. But again, I don't think it would go 105 00:06:12,760 --> 00:06:15,200 Speaker 4: beyond that. I don't think Beijing is ready to take 106 00:06:15,279 --> 00:06:16,640 Speaker 4: up arms for Iran. 107 00:06:17,440 --> 00:06:20,560 Speaker 1: How does what's happening in the Middle East play into 108 00:06:20,800 --> 00:06:24,560 Speaker 1: where China's relationship is with the United States at the moment? 109 00:06:24,720 --> 00:06:28,360 Speaker 1: Will the trade issues become embroiled and influence how China 110 00:06:28,720 --> 00:06:30,040 Speaker 1: is going to act from here? 111 00:06:30,560 --> 00:06:34,760 Speaker 4: I think China will use what's happening with Iran as 112 00:06:34,920 --> 00:06:40,240 Speaker 4: a propaganda tool. We've seen that with Gaza, We've seen 113 00:06:40,279 --> 00:06:43,240 Speaker 4: that with Lebanon. I think we will see it again. 114 00:06:43,880 --> 00:06:47,320 Speaker 4: We will see China try and paint Israel in the 115 00:06:47,400 --> 00:06:53,160 Speaker 4: United States as being co conspirators and conducting themselves poorly 116 00:06:53,200 --> 00:06:57,200 Speaker 4: on the global stage. I don't think China wants to 117 00:06:57,200 --> 00:07:00,880 Speaker 4: be embroiled any further than that. And I don't think 118 00:07:01,000 --> 00:07:05,040 Speaker 4: China is going to, let's say, offer rare earth magnets 119 00:07:05,040 --> 00:07:08,720 Speaker 4: of the United States, let's up on, you know, supporting Israel. 120 00:07:08,960 --> 00:07:10,880 Speaker 4: I don't think those cards are on the table. 121 00:07:11,200 --> 00:07:14,560 Speaker 1: John lou Are, Greater China Executive Editor, thank you very much. 122 00:07:15,320 --> 00:07:17,840 Speaker 1: For more explanations like this from our team of three 123 00:07:17,880 --> 00:07:20,960 Speaker 1: thousand journalists and analysts around the world, go to bloomberg 124 00:07:21,000 --> 00:07:26,040 Speaker 1: dot com slash explainers. I'm Stephen Carroll. This is here's why. 125 00:07:26,280 --> 00:07:28,800 Speaker 1: I'll be back next week with more. Thanks for listening.