Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. I'm Stephen Carroll, and
Speaker 1: this is Here's Why, where we take one new story
Speaker 1: and explain it in just a few minutes with our
Speaker 1: experts Here at Bloomberg.
Speaker 2: We've taken out top military commanders, senior nuclear scientists, the
Speaker 2: Islamic regime's most significant enrichment facility, and a large portion
Speaker 2: of its ballistic missile arsenal. More is on the way.
Speaker 1: The escalation in the conflict between Iran and Israel has
Speaker 1: sent shockwaves across the Middle East and through global markets.
Speaker 1: While much of the focus has been on the United
Speaker 1: States role, there's another economic powerhouse that's watching closely. As
Speaker 1: Middle East energy expert Alan Wald explains.
Speaker 3: China is a really big player. China is basically the
Speaker 3: largest customer for these Persian golf producers that includes Iran
Speaker 3: and Saudi Arabia and other And you don't want to
Speaker 3: kick the nest when it comes to China. China is
Speaker 3: not going to like it if their ships are disrupted,
Speaker 3: if there are access to oil is disrupted.
Speaker 1: So here's why China is a key player in the
Speaker 1: Israel Iran conflict. Our Greater China Executive editor John Lewell
Speaker 1: joins us now for more John, First of all, how
Speaker 1: important is Iran to China.
Speaker 4: China is the world's largest importer of oil and needs
Speaker 4: that oil to power its economy. That economy has been weak.
Speaker 4: It's been struggling with consumer prices, it's been struggling with
Speaker 4: efficiency and productivity. Higher oil prices is not going to
Speaker 4: help that. And volatility upheaval in the Middle East and
Speaker 4: around the world is not going to help. It's not
Speaker 4: going to mean people are going to buy more Chinese exports.
Speaker 4: And so much of the oil that China needs comes
Speaker 4: from the Middle East, And because of American sanctions, China
Speaker 4: is substantially the biggest buyer of Iranian oil, and so
Speaker 4: the sticks are high.
Speaker 1: So a strong economic link then between Iran and China.
Speaker 1: But what about Beijing's relationship with Israel? How close are
Speaker 1: those countries.
Speaker 4: The relationship with Israel is a difficult one at the moment,
Speaker 4: and primarily that is because of how close a relationship
Speaker 4: Israel has with the United States and the fact that
Speaker 4: China and the United States are embroiled in this rivalry.
Speaker 4: And so as part of that rivalry between the US
Speaker 4: and China, China has wanted to present itself on the
Speaker 4: global stage as being a champion of the global South,
Speaker 4: and the Muslim world is a very important part of
Speaker 4: that global South that China wants to get on its side.
Speaker 4: And so whenever there's been a conflict Israel's conduct in Gaza,
Speaker 4: in Lebanon, and now with Iran, China has on the
Speaker 4: global stage stood with the Muslim countries as part of
Speaker 4: this attempt to become this champion of the global South.
Speaker 1: What is Beijing said about this escalation between Iran and
Speaker 1: Israel so far?
Speaker 4: So a day after the bombings in Iran started, a
Speaker 4: Chinese Foreign Minister Wang You called both the foreign ministers
Speaker 4: of Iran and the fore minister of Israel. He told
Speaker 4: the Iranian foreign minister the China condemned the attacks, and
Speaker 4: he told the Israeli foreign minister that China was very
Speaker 4: opposed to the attacks. And so a few days after that,
Speaker 4: President Sheijing Ping came out and said that China was
Speaker 4: deeply worried about the situation in Iran. And in both instances,
Speaker 4: President Chi and Foreign Minister Wang You have come out
Speaker 4: to say that China wants to play a role in
Speaker 4: diplomacy that they do not think diplomacy has been you know,
Speaker 4: lost the way. They still think diplomacy is a way
Speaker 4: that the nuclear issue can be resolved.
Speaker 1: China has been a mediator in the Middle East before
Speaker 1: brokering a deal between Saudi Arabia and Iran and in
Speaker 1: twenty twenty three. Is the region a strategic priority for Chinese?
Speaker 4: I wanna say it is a priority, although I think
Speaker 4: in this instance it will be more difficult for China
Speaker 4: to play the mediator than it was in twenty twenty
Speaker 4: three with Iran and Saudi Arabia, because China has a
Speaker 4: relatively good relationship with both Iran and Saudi Arabia, whereas
Speaker 4: we are just discussing the relationship with Israel and by extension,
Speaker 4: the United States has been much more difficult, and so
Speaker 4: I think there would be much more suspicion on the
Speaker 4: part of Israel and the United States on how fair
Speaker 4: and unbiased the mediator China could be in the situation.
Speaker 1: What should we have learned from how China has responded
Speaker 1: to previous episodes of violence and then at least to
Speaker 1: understand how their response might play out from here.
Speaker 4: I think the response will be limited to rhetoric, and
Speaker 4: I think you will hear a lot of rhetoric coming
Speaker 4: out of Beijing condemning the Israeli attacks, also drawing a
Speaker 4: line between Israel and the United States. But I think
Speaker 4: it will stay at rhetoric because one China has actually
Speaker 4: deeper economic ties with Saudi Arabia and the Gulf States.
Speaker 4: China not only buys energy from those places, but it
Speaker 4: also invests in those places. You have Chinese companies building
Speaker 4: factories there, There's a Chinese self driving company, pony Ai,
Speaker 4: who's putting driverless vehicles on the roads in those countries,
Speaker 4: and so that economic relationship is much deeper than the
Speaker 4: one that China has with Iran. And I think also
Speaker 4: it's important to note that if this conflict results in
Speaker 4: the United States being embroiled and yet another Middle East conflict,
Speaker 4: Beijing's not going to be unhappy about that.
Speaker 1: What could provoke a greater reaction from China in terms
Speaker 1: of defending its links to Iran.
Speaker 4: I think if there was some action directly against the regime,
Speaker 4: that there was an effort to topple the regime, I
Speaker 4: think that would be very sensitive to China, because there
Speaker 4: is the suspicion in Beijing that ultimately that is what
Speaker 4: the United States wants for China as well, regime change,
Speaker 4: and so I think you would see an uptick in
Speaker 4: the rhetoric. But again, I don't think it would go
Speaker 4: beyond that. I don't think Beijing is ready to take
Speaker 4: up arms for Iran.
Speaker 1: How does what's happening in the Middle East play into
Speaker 1: where China's relationship is with the United States at the moment?
Speaker 1: Will the trade issues become embroiled and influence how China
Speaker 1: is going to act from here?
Speaker 4: I think China will use what's happening with Iran as
Speaker 4: a propaganda tool. We've seen that with Gaza, We've seen
Speaker 4: that with Lebanon. I think we will see it again.
Speaker 4: We will see China try and paint Israel in the
Speaker 4: United States as being co conspirators and conducting themselves poorly
Speaker 4: on the global stage. I don't think China wants to
Speaker 4: be embroiled any further than that. And I don't think
Speaker 4: China is going to, let's say, offer rare earth magnets
Speaker 4: of the United States, let's up on, you know, supporting Israel.
Speaker 4: I don't think those cards are on the table.
Speaker 1: John lou Are, Greater China Executive Editor, thank you very much.
Speaker 1: For more explanations like this from our team of three
Speaker 1: thousand journalists and analysts around the world, go to bloomberg
Speaker 1: dot com slash explainers. I'm Stephen Carroll. This is here's why.
Speaker 1: I'll be back next week with more. Thanks for listening.