As the U.S. and allies continue strikes on Iran, Chinese leaders watch from Beijing as the leadership of their second major partner this year is being decapitated under a military onslaught. 

When President Donald Trump took office for the second time last year, he faced a more closely aligned “axis” of adversaries that, during the four-year Biden administration, had been clustered closer together around China and Russia. Iran is a central pillar of that axis, supplying war matériel and cheap oil exports in exchange for investments, diplomatic cover, and help avoiding U.S. sanctions.  

But, the U.S. operation targeting Iran’s ballistic missile and nuclear programs, regardless of whether it ultimately topples the theocratic regime in Tehran, will likely disrupt China’s interests in the region.

Now, as was the case following President Donald Trump’s intervention to detain Beijing-friendly Venezuelan dictator Nicolás Maduro in January, China is left holding the bag and its regional strategy is teetering on the edge of collapse.  

The conflict threatens China’s arrangements and oil access

China has for years expended both physical and political capital on the Iranian regime, including by supporting its ballistic missile program through dual-use exports, boosting its terrorist proxies to distract the United States, and helping it evade U.S. oil sanctions through shadow fleet operations.

Iran is also a vital component lying at the geographical center of Beijing’s plans to build connections by land and sea to markets in the Middle East and Europe. 

In 2021, Iran and China signed a 25-year deal in which China promised to invest $400 billion in Iran in exchange for continued access to Iran’s oil supplies to fuel its energy-hungry economy. The agreement reflected a “deepening relationship,” according to the U.S.-China Economic and Security Review Commission. 

“For its part, Iran views China as a critical economic lifeline and diplomatic supporter against pressure from the United States,” the congressional commission wrote in a 2021 report on the relationship. 

China is Iran's "top economic partner"

“China has sustained its status as Iran’s top economic partner despite significantly reducing economic engagement due to its partial compliance with U.S. sanctions. Nevertheless, various circumvention methods have allowed China to continue purchasing Iranian oil in violation of these sanctions,” the commission wrote.  

When the conflict broke out, China relied heavily on Iran’s crude oil exports. Data show that China bought more than 80% of Iran’s shipped oil in 2025, even under the U.S. sanctions regime. It imported about 1.38 million barrels per day on average last year, representing 13.4% of its total oil imports by sea, Reuters reported last month. Because China is one of Iran’s only customers, it often sold the oil at below-market prices, a boon for Beijing.  

Just the News reported on Tuesday that though China will likely be able to find alternative sources for crude oil imports, it will be forced to do so at market prices. Market watchers report that the conflict in the Middle East could bring increases to oil prices that reach more than $100 a barrel.  

The conflict in the Arabian Gulf also will impact China’s Liquefied Natural Gas (LNG) supply. Qatar, a Gulf monarchy from whom China imports about 14% of its LNG supply, announced on Wednesday that it was suspending its production and said it would not be able to return to normal levels for at least a month. 

Highlighting its vulnerability, China reportedly pressed early in the conflict for Iran to keep the Strait of Hormuz open so as not to jeopardize its imports of LNG from Qatar. 

A distraction for the United States

The conflict also has the potential to disrupt China’s apparent ambitions to prop up the Iranian regime as a distraction for the United States, which for more than a decade has attempted to pivot its forces to the Pacific to deter China but instead has ended up diverted by Middle East instability. 

To this end, Iran integrated Chinese technology into its telecommunications network, expanded cooperation with Chinese companies at the forefront of domestic surveillance technologies, and developed a state-controlled internet network that mirrors China’s Great Firewall. 

“Beijing is providing the Islamic Republic with the tools to survive its own population’s rejection. Why? Because a dependent Iran is a useful Iran,” Zineb Riboua, Research Fellow at the Hudson Institute specializing in the Middle East, wrote earlier this week. She said that China values Iran’s ability, through its proxies and directly, to draw U.S. attention away from its own backyard. 

To this end, Beijing has propped up Iran militarily. China was a major arms supplier for Iran in the 1980s, but sales decreased as Iran faced mounting international sanctions over its nuclear program. 

However, companies based in China have made available components vital for Iran’s ballistic missile program in recent years. Last April, the U.S. Treasury Department sanctioned six entities and six individuals based in China for their assistance in procuring sodium perchlorate and dioctyl sebacate, the building blocks of ballistic missile components.  

China and Iran have also reportedly held discussions about the transfer of supersonic anti-ship missiles that could pose a deadly threat to any U.S. naval vessel in proximity to Iran. Just days before President Trump ordered U.S. strikes against Iran, Reuters reported that Iran and China were close to finalizing a deal amid the U.S. buildup.

Chinese facilitated weapons transfers to the Houthis in exchange for safe passage

China’s support for the Houthis in Yemen, the Iranian proxy terrorist group that was responsible for the most effective attacks against Red Sea shipping lanes that began in 2023, is emblematic of the efforts to distract the U.S.  

Israeli media reported last year that the Chinese facilitated weapons transfers to the Houthis in exchange for safe passage for their ships. The U.S. Office of Foreign Assets Control later confirmed that a senior Houthi official had been in regular contact with the Russian and Chinese governments to ensure none of the group's strikes targeted their vessels.

In April 2025, the Treasury Department sanctioned a China-based satellite technology company for providing satellite imagery to the Houthis that enabled strikes on U.S. naval vessels that were operating in the Red Sea. There are indications that the Houthis plan to resume such attacks on international shipping in retaliation for the U.S. strikes against Iran. 

Hudson Institute: “The U.S. cannot fight a two-theater war.” 

When the Houthis first attacked shipping in 2023, it precipitated a 90% decline in shipping traffic through the Red Sea resulting in $1 trillion of trade disruptions. Though the costs fell on countries globally, the United States expended the most military resources to reopen the strategic waterway, employing an estimated one-quarter of its vital missile interceptor stocks. 

The key to keeping the U.S. bogged down in the Middle East, Hudson’s Riboua said, is that “the U.S. cannot fight a two-theater war.” 

She explained, “A Middle East that demands permanent crisis management bleeds the American military of the ships, aircraft, and munitions it needs for Pacific deterrence. By contrast, a Middle East restructured toward stability, where Iran’s proxy architecture has been degraded, and Gulf partners are aligned, can be managed with a lighter footprint, freeing decisive combat power for the Pacific theater.”