[US-Iran War] China, Iran's Economic Partner, Chooses Mediation Over Support

Wang Yi, member of the Central Political Bureau of the Communist Party of China and Minister of Foreign Affairs. Photo by Reuters and Yonhap News.

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China, considered one of Iran's closest allies, has chosen to position itself as a "peace mediator" rather than respond militarily to the US and Israeli airstrikes. Analysts say this decision reflects a complex set of economic and diplomatic interests, including the US-China summit scheduled for the end of this month and the recent surge in international oil prices.

According to foreign media and the Chinese Ministry of Foreign Affairs on March 4, Wang Yi, Director of the Office of the Central Foreign Affairs Commission of the Communist Party of China and Minister of Foreign Affairs (pictured), recently held consecutive phone calls with the foreign ministers of Israel, Russia, France, Oman, and Iran, urging for a diplomatic resolution. Since the outbreak of the war, China has consistently emphasized “resolving issues through dialogue and negotiation.” This reaffirmed its longstanding position of adhering to the principles of the United Nations Charter and opposing the use of force or threats in international relations.

Iran and China are united by their roles as an "economic alliance" and an "anti-Western" bloc. Since establishing diplomatic relations in 1971, the two countries have deepened their ties, elevating their relationship to a "comprehensive strategic partnership" during Chinese President Xi Jinping’s visit to Tehran in 2016. Iran has functioned as a key economic partner supplying cheap crude oil to China and as a central hub for China’s Belt and Road Initiative (a land and maritime Silk Road) in the Middle East.

Nevertheless, prevailing opinion is that China’s focus on diplomacy rather than military support is rooted in its relationship with the United States. With US President Donald Trump scheduled to visit Beijing on March 31, taking an overtly pro-Iranian stance could negatively impact the atmosphere of the US-China summit. Bloomberg reported that US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are expected to meet in Paris, France, around March 7 to discuss key agenda items in advance.

Economic interests cannot be ignored either. As a result of the war, international oil prices have soared. According to the Wall Street Journal, Brent crude rose 6.7% to $77.74 per barrel on March 2, while West Texas Intermediate (WTI) climbed 6.3% to $71.23. Despite US sanctions on Iran, China has remained the largest buyer of Iranian crude oil.Some analysts estimate that China purchased more than 80% of Iran’s crude exports last year.

Methanol, a key raw material for Chinese manufacturing, is also a variable. Iran is the world’s second-largest methanol producer and a major supplier to China. According to financial data provider Wind, the spot price of methanol in China jumped 7.41% on March 3 to 2,420 yuan (about $351) per ton compared to the previous trading day. If Iran were to block the Strait of Hormuz for an extended period, it would inevitably disrupt China’s methanol imports. Rajiv Biswas, CEO of Asia Pacific Economics based in Singapore, said, “China is the world’s largest methanol producer, but it still needs substantial imports to meet domestic demand. If the strait remains blocked for a long time, import disruptions are unavoidable.”

Some have suggested that a prolonged war could disperse US military forces, creating a more favorable environment for China. However, experts agree that China would also suffer significant short-term losses. Reuters reported, “By pressuring both Venezuela and Iran at the same time, President Trump has weakened two of China’s key allies that supply it with cheap oil,” adding, “At least for now, this is not a situation China would welcome.”

China is expected to maintain its “mediator” stance for the time being while continuing its strategic partnership with Iran. Even if new leadership is appointed, significant changes in bilateral relations are unlikely. Andrea Ghiselli, research director at the ChinaMed Project, told the South China Morning Post (SCMP) in Hong Kong, “China may sustain some losses, but the impact is likely to be limited.”

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