Donald Trump has paused “Project Freedom”, the US operation aimed at restoring commercial shipping through the Strait of Hormuz. In a post on social media just days after the operation was first announced, Trump said he had made the decision to give US negotiators time to reach an agreement with Iran to end the war.
Iranian state media has framed the suspension as a US failure. Iran had warned that it would target vessels attempting to enter the waterway and subsequently launched missiles and drones at civilian ships and the United Arab Emirates. It is unclear where the conflict will go from here. But whatever happens next, the role of China will be crucial.
China has kept Iran’s economy afloat in the first two months of the war. Before the war, China accounted for up to 90% of Iran’s oil exports, importing over 1 million barrels each day. Iran continued to send large amounts of crude to China during the war’s early stages, with CNBC reporting that at least 11.7 million barrels were shipped between February 28 and March 10.
Payments for Iranian oil have been processed by institutions such as China’s Bank of Kunlun and the Cross-border Interbank Payment System. These are alternatives to the US-dominated Swift global payment system that enable oil trades to be settled in yuan. This has helped Iran bypass western sanctions by putting oil revenues out of the reach of the US Treasury.
The flow of oil from Iran to China has dropped since mid-April, when the US imposed a naval blockade of Iranian ports. But China remains able to provide Iran with a revenue lifeline – albeit a more limited one – moving forward.
On May 2, China’s Ministry of Commerce ordered firms not to comply with US sanctions on five Chinese refiners linked to the Iranian oil trade. This enables the refiners to continue processing Iranian crude that arrives by train or is already outside the blockade area. Roughly 160 million barrels of Iranian crude were in transit or in floating storage at sea as of April 21.
Abedin Taherkenareh / EPA
China’s economic support for Iran is emerging as a source of friction between Washington and Beijing ahead of Trump’s upcoming summit with Chinese leader Xi Jinping. In an interview with Fox News on May 4, the US treasury secretary, Scott Bessent, said China’s continued purchases of Iranian oil amounted to funding global terrorism.
However, the influence of China over Iran’s economy gives it leverage over Tehran. And it does appear to be in the interests of China for the war to end. Rising prices are beginning to affect the Chinese economy, and helping the conflict come to an end would also assist the Chinese government in its push to present itself as the responsible global power.
China has already played an important diplomatic role in the conflict. While Pakistan has served as one of the key mediators between the US and Iran, many analysts have credited China as being the key driving force behind the April ceasefire. At that time, Iranian officials said China had asked them to show flexibility and defuse tensions.
China seems to have continued pressing Iran to negotiate with the US since then. Hours after Trump announced he was pausing the US effort to guide vessels out of the Strait of Hormuz, Iran’s foreign minister, Abbas Araghchi, met with his Chinese counterpart, Wang Yi, in Beijing. This is the first time Araghchi has travelled to China since the war broke out.
In a statement released after the meeting, the Chinese foreign ministry said: “China considers that a complete cessation of fighting must be achieved without delay … and that continuing to negotiate remains essential.” Also after the meeting Araghchi said Iran would protect its “legitimate rights and interests in the negotiations”, but will “accept a fair and comprehensive agreement”.
Chinese military support
At the same time, there are some signs that China is hedging its bets. A protracted war involving the US in the Middle East has advantages for China too, primarily because it would divert US attention from the Asia-Pacific region. Reports suggest that China is considering taking steps that would help Iran militarily if a full-blown conflict returns.
According to US intelligence, Beijing has weighed transferring air defence systems to Iran, possibly routing the shipments through other countries to mask its involvement. CNN reported in April that the defence systems in question were shoulder-fired anti-air missiles known as Manpads. China responded by saying it “has never provided weapons to any party to the conflict”.
Chinese technical assistance also enhanced the effectiveness of Iran’s military earlier in the war. Since 2021, Iran has been implementing BeiDou, a Chinese satellite navigation system. As an alternative to the US-run Global Positioning System (GPS), BeiDou has helped guide Iranian missile strikes in the conflict and has enabled more effective monitoring of US military deployments.
China has played a key role in how the conflict has played out so far. And given its position of influence over Iran, it will be a leading factor in whether the war reaches a negotiated end or spills back into open conflict.
