Please note that that this article refers strictly to the recent US – Iran conflict, a conflict which followed the assassination of Quasem Soleimani. Before getting started, it would be recommended to familiarize yourself with the economic relationship between the China and the United States on the one hand (covered through a dedicated ChinaFund article which can be accessed by clicking HERE) and the relationship between China and Iran on the other (to read an article about just that, simply click HERE).
In a nutshell, let’s just say that Sino-Iranian economic relations are largely driven by the United States variable, with China being essentially forced to significantly reduce its trade volume with Iran so as to avoid potentially (economically) debilitating scenarios such as situations involving the blacklisting of Chinese companies by the US.
Needless to say, the United States is being especially aggressive with respect to Iran during the presidency of Donald Trump, with perhaps the two most important events being represented by the withdrawal of the United States from the JCPOA and subsequent re-instatement of sanctions against Iran on the one hand and the assassination of Quasem Soleimani on the other.
What does China have to say about this attitude?
On the surface, it has quite a bit to say in a very vocal and negative manner. Right from the beginning, it has protested against the unilateral US JCPOA withdrawal and, broadly speaking, against increasing US isolationism, not just as far as Iran-related equations are concerned but also with respect to controversial decisions such as the unilateral US withdrawal from the Paris Accords and quite a few others.
The deeper we dig in an effort to understand what goes on beneath the surface, however, the more we realize that China actually stands to gain quite a bit as a result of the recent actions of the United States, perceived by many trading partners (including Western ones) as impulsive to the point of recklessness.
Nouriel Roubini and other economists as well as geopolitics experts have painted a valid case involving China actually wanting a Trump re-election scenario. As counter-intuitive as this may seem in light of China’s public statements which suggest the exact opposite, simple game theory analysis makes it clear that Donald Trump’s actions are actually creating much-needed geopolitical breaches that China can try to exploit.
It says quite a bit about the state of affairs over in the US that some actions even make a totalitarian regime such as that of China look reasonable but few experts can deny the fact that several frustrated Western partners of the United States are starting to genuinely feel that way.
Under “normal” geopolitical circumstances, where leaders of Western countries including (or especially!) the United States act in a predictable to the point of boring manner, it would have been hard if not impossible for China to brand itself as a reasonable geopolitical player. However, “wild card” leaders who have emerged in the West, for example Donald Trump in the United States, have dramatically altered the status quo and China now finds itself on the receiving end of a most unexpected geopolitical opportunity.
For example, in nominal terms, China is still the world’s #1 polluter by far, but the withdrawal of the United States from the Paris Accords correlated with the fact that the US pollutes more on a per capita basis ended up relieving China of international pressure to a more than decent degree. Again, a most unexpected opportunity.
The same way, China continuously makes “questionable” geopolitical decisions which in a “normal” geopolitical environment would have generated almost ubiquitous international reactions. However, in light of how many unexpected surprises pop up as a result of the actions of unpredictable Western leaders such as Donald Trump, many of China’s decisions become more difficult to attack or even end up being lost in the proverbial noise.
Therefore, the ChinaFund.com team believes that when analyzing the US – Iran conflict from the perspective of China, those who simply rely on official headlines are being misled… to put it mildly. While the official narrative does indeed tend to revolve around the fact that China condemns the recent US – Iran events and while this narrative has even been accompanied by military action such as joint China – Iran – Russia drills, it is imperative to see things beneath the surface and understand that thus far, China has quite a few reasons to be satisfied with the changes in the global geopolitical landscape brought about by the actions of Donald Trump.
However, “volatility” is the operative word when it comes to sensitive issues such as the US – Iran one. Those who believe the current situation can be compared to the Afghanistan, Iraq and Syria ones are merely deluding themselves. Iran most definitely represents something one can consider a line in the sand as far as the China – Russia (for an economic analysis pertaining to the trade situation between China and Russia, click HERE) axis is concerned and it is impossible to predict what could happen if things were allowed to degenerate.
This much is certain: from an economic perspective, military perspective, humanitarian perspective and pretty much any other imaginable dimension, the current geopolitical landscape seems worrisome. One situation after another, geopolitical players are pushing the limits of their opponents in a more or less calculated manner and in light of the fact that the status quo under Donald Trump tends to lean more strongly toward the “less calculated” zone, prudence is the operative word. Should you or your organization be interested in being kept up to date on our US – China – Iran perspective or anything else pertaining to the economic implications of today’s volatile geopolitical landscape, simply reach out by sending us a message through the Contact section of ChinaFund.com and we will get back to you as soon as possible.