As tensions in the Strait of Hormuz escalate, the implications go far beyond energy markets. What does this disruption mean for China economically and strategically?
In this article, Majid Ghorbani, CEIBS Associate Professor of Management Practice & Director of Global MiM Programme, examines China's exposure, its growing resilience, and the strategic opportunities emerging across energy, diplomacy, and infrastructure.
As tensions escalate across the Persian Gulf and the wider Middle East, the situation has become not only a regional security concern, but also a strategic test for China.
The Strait of Hormuz remains one of the world’s most critical energy chokepoints: carrying a substantial share of global seaborne oil and gas. Any protracted disruption reverberates through production, refining, transport and the wider global economy. Countries that depend on the region’s hydrocarbons are already feeling the impact: deliveries are delayed or cancelled, refineries face operational strain, aviation and shipping routes are disrupted, and industrial activity has been interrupted.
For many developing nations in Africa and Asia, the consequences are immediate and visible — long queues at petrol stations and propane distribution centres, grounded aircraft and cargo ships, stalled trucks and mounting shortages of fertiliser ahead of planting seasons.
For China, the world’s largest energy importer, prolonged instability is not just a supply shock, but a direct challenge to industrial stability, price control, and broader economic policy.
Global exposure and China’s relative resilience
While the disruption is global, its impact is uneven. China, while deeply exposed, is better positioned than many of its East Asian peers such as Japan and South Korea, which are heavily dependent on Gulf energy and often have fewer immediate alternatives.
In recent years, China has actively diversified its energy sources: increasing purchases from Africa and other Asian suppliers, expanding Russian imports from Russia’s far east, and building strategic petroleum reserves capable of covering several months of consumption as a buffer against acute shortages. Prior to the latest escalation, an estimated 13–15% of its oil imports came from Iran, supplemented by supplies from other Gulf producers, Africa, Latin America, Southeast Asia, and Russia.
Reports since the outbreak of hostilities indicate that most Iranian tankers that have successfully transited the Strait were destined for China, implying a concentrated trade relationship that has insulated Beijing to a degree. Nevertheless, that insulation is imperfect. On April 14, the US announced measures intended to block shipments through the Strait in order to deny Iranian revenue and pressure Tehran back to negotiations.
Some analysts estimate that Iran has left as much as 200 million barrels of oil loaded on tankers offshore, cargo that could be offered to China or to other buyers if trans-shipment channels, overland routes or legal workarounds are found.
Immediate economic effects
The war’s economic effects are not limited to pump prices. As of mid-April, nominal retail fuel prices in China had risen by over 31% since the start of the conflict; by comparison, average US pump prices rose by more than 38% in the same period. These increases translate into cascading cost pressures along supply chains. Petrochemical feedstocks used to make polymers, fertilisers and plastics have seen price increases ranging from roughly 50% to more than 100% in different markets, while freight and logistics costs have escalated by similar multiples. Many manufactured goods contain oil-derived components, and daily volatility in oil markets magnifies uncertainty for producers and distributors. Fertiliser shortages in particular threaten food security in vulnerable countries in this planting season, compounding humanitarian and economic risks.
The disruption reaches across the network of production, distribution and consumption. In China, the shock will complicate the government’s “dual circulation” strategy — the policy to balance a strong domestic consumption and production cycle with continued integration into global trade. In times of scarcity, states tend to prioritise domestic supply; persistent shortages or high prices would likely incentivise China to prioritise internal needs and conserve strategic stocks, gradually reducing its outward-facing supply commitments. Domestic inflationary pressures would rise, but the government’s extensive policy toolkit — including price controls, subsidies and reserve releases — can temper the immediate impact more effectively than in many open-market economies.
China’s strategic buffers and alternatives
Beyond short-term workarounds, China has strengthened long-term resilience. Following trade frictions since the first Trump administration and ongoing technology constraints under the Biden administration, Beijing accelerated efforts to diversify critical imports. Russia’s eastern oil exports offer a geographically convenient alternative that bypasses the Gulf. China’s substantial investments in renewable energy mean it now leads the world in installed renewable capacity, offering a structural hedge against imported fossil fuel shocks. In addition, China retains extensive domestic coal reserves that can be mobilised for power generation if necessary, though increased coal use runs contrary to official decarbonisation commitments.
These measures reduce China’s relative vulnerability, but the country is not immune. The knock-on effects for industry, especially petrochemicals and manufacturing that rely on oil derivatives, remain significant. Price spikes for polymers and related materials increase costs for producers and consumers, while heightened shipping rates and supply‑chain fragmentation add further pressure.
China’s strategic posture and policy options
Historically, China has avoided explicit alignment in military conflicts. While China has cultivated a close relationship with Iran stretching back decades, it also maintains and pursues stronger ties with Gulf monarchies and other regional partners. Consequently, China is unlikely to take open military sides; instead, it will emphasise restraint, de‑escalation and negotiated solutions. That posture is consistent with a long-standing foreign‑policy principle of non‑interference and serves Beijing’s interest in stability that favours continued trade and investment.
At the same time, the crisis offers China and Chinese firms strategic opportunities. Diplomatically, China can position itself as a stabilising actor, offering to mediate or facilitate talks and to provide humanitarian assistance, a role that could enhance soft power in the region and among countries sceptical of Western military interventions. Energy diplomacy presents another lever: China could, in principle, use its strategic reserves to help neighbouring economies in acute need, creating goodwill and reducing US influence in Asia and Africa.
Commercially, expanding Chinese-flagged shipping and logistics in the region, and offering naval escorts for commercial convoys, are feasible steps that would both protect supply lines and benefit Chinese maritime industries; such actions would also deepen practical ties with countries seeking alternatives to US security guarantees.
Looking beyond the immediate crisis, China could also assume a more formal role in post-conflict governance of the Strait. One option would be to participate in a multilateral consortium overseeing the safe passage of commercial traffic through the Strait of Hormuz. Such a mechanism would potentially ensure stability, reduce the risk of future disruptions, and provide shared security guarantees for global shipping. For China, participation in such a framework would represent a calibrated shift from a purely non-interventionist stance toward a rules-based, cooperative security role, while still avoiding unilateral military commitments.
Economic instruments and long-term adjustments
The crisis may accelerate China’s push toward energy transition and supply‑chain localisation. Reducing reliance on imported oil and gas by scaling renewables, electrifying transport and promoting low‑carbon domestic technologies would directly address a key strategic vulnerability while supporting industry and export competitiveness. China can export not only finished green technologies — such as electric vehicles and renewable energy generation equipment — but also the investment model that establishes production capacity abroad. Helping other countries build EV factories or renewable manufacturing hubs can diversify global production and shrink the fragility of long, oil‑dependent supply chains.
Currency and trade policy are additional arenas for manoeuvre. Volatility in the US dollar and perceptions of uneven US security commitments could bolster the Chinese government’s efforts to internationalise the renminbi and expand trade settlements in local currencies, an objective China has pursued through bilateral swap lines and trade agreements. Strengthening economic linkages with Europe, Asia and parts of the Middle East could lessen reliance on dollar‑centred finance and create new avenues for Chinese commercial influence.
Infrastructure, logistics and Belt and Road opportunities
Under the Belt and Road Initiative, China can intensify efforts to develop overland routes and transport corridors that reduce dependence on maritime chokepoints. Existing China–Pakistan corridors could be extended toward Iran through enhanced rail and pipeline connectivity, while investments in ports and shipment facilities across the region would create alternative routes for energy and goods. Such infrastructure would be costly and may be politically sensitive, but the strategic payoff in resilience and market access could be substantial, while benefiting China’s construction industry.
Non‑interference has long underpinned China’s foreign policy, distinguishing its approach from that of states willing to provide military guarantees. In the current crisis, restraint may enhance China’s appeal to governments that prefer predictable, non‑coercive partners. If China can deftly combine diplomatic engagement, energy diplomacy, expanded maritime and commercial presence, and an accelerated green transition, the present turmoil could strengthen rather than weaken its global position.
For Chinese firms, that would open commercial opportunities; for Beijing, it would be a chance to deepen relations across Asia, Europe and the Middle East while reducing strategic vulnerabilities exposed by an unstable Strait of Hormuz.
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