How China’s Energy Needs Are Driving Its Push for Peace in the Middle East

Summary

How China’s Energy Needs Are Driving Its Push for Peace in the Middle East China’s push for stability in the Middle East reflects energy dependence and economic pressure, as Beijing seeks to manage trade tensions and reset relations with the United States. China has been critical of the US war against Iran and remained aloof from the diplomacy taking place in Islamabad—until very recently. In early April, China officially entered the talks, such as they are, alongside other concerned parties, including Saudi Arabia, Turkey, and Egypt. China’s role soon became apparent as it emerged as a force in helping broker a two-week ceasefire between Iran and the United States, something strongly suggested by President Donald Trump. Although China would probably prefer its US archrival bogged down in another war, Beijing has its own reasons for seeing the Persian Gulf at peace. The usual platitudes about the need for dialogue and negotiations aside, China needs some type of stability in the Persian Gulf for its economic supply chains, and if relative calm can be restored, it could help reset relations with the United States. China’s Dependence on Middle East Oil and LNG Oil looms large in Chinese geoeconomic considerations. The Asian giant is heavily dependent on imported oil and natural gas. According to Columbia University’s Center on Global Energy Policy, in 2025 China imported close to half of its crude oil and one-third of liquified natural gas (LNG) from the Middle East. The three major Middle Eastern sources of oil are Saudi Arabia, Iran, and Iraq. Although Iran has been under US economic sanctions for the sale of its oil, the analytics firm Kpler estimates that China imported 1.38 million bpd of crude oil from Iran in 2025. Indeed, China is Iran’s biggest customer for its oil (buying 90 percent of its exports) and overall, its lead trade partner. The inability of regular commerce to transit the Strait of Hormuz and the damage to oil and gas facilities in the United Arab Emirates (UAE), Kuwait, Saudi Arabia, and Qatar are not just inconveniences; they are issues of Chinese national security. China has a substantial oil stockpile, estimated at 1.2 billion barrels as of early January, around a four-month supply, according to Kpler. However, a prolonged dislocation in the Persian Gulf and the knock-on effects on the Chinese economy could force changes in energy policy, including reduced use of liquefied natural gas (LNG) and oil, greater use of coal for power generation, and more pressure to advance faster on using renewables. Another option would be to impose greater conservation, an easy option in an authoritarian political system. China’s sensitivity to energy issues came up in the March 2026 meetings of the National People’s Congress. In the country’s latest Five-Year Plan, starting in 2026, the government plans to increase its oil reserves by adding and expanding national storage bases. China-US Trade Tensions, Tariffs, and Export Declines There is also a China-United States angle to Beijing’s involvement in the peace talks. Simply stated, China needs a reset in its relations with the United States. In 2022, China’s exports to the United States stood at $536.3 billion; in 2025 Chinese exports fell to $309.4 billion. The US balance of trade deficit with China also dropped from a high of $418 billion in 2018 to $202.1 billion in 2025. Tariffs implemented by both the Biden and Trump administrations have had a sting. This has left the landscape more challenging for Beijing. US trade is important for economic growth, and the United States could use cheaper Chinese goods to help with the affordability issue. At the same time, it appears that the Chinese government prefers trying to sell more exports to the United States than undertaking the more arduous tasks of cleaning up the real estate sector, bolstering the domestic safety net, contending with youth unemployment (16.9 percent in November 2025), and freeing up the private sector. The real estate sector is a massive problem as it encompasses the Chinese banking sector, construction companies, local governments, and homeowners. Considering the above, China does not need a prolonged energy problem or the loss of important Middle Eastern markets. While President Xi Jinping is no doubt aware of the need to address these issues, they are politically complicated, raising the potential for social unrest, something deeply feared by the Communist Party. US Economic Pressures: Inflation, Tariffs, and Political Constraints For his part, President Donald Trump faces the potential for rising inflation due to higher energy costs, the possibility of slower economic growth, and disconnect among a sizable part of the population over the Iran War. While the Trump tariffs have succeeded in reducing the trade deficit with China and have given the US government a substantial source of revenue, 66 percent of Americans believe tariffs reduce the affordability of everyday items, including food, healthcare, and transportation, according to Gallup. A reset with China might provide the Trump administration a little more leeway in continuing to reduce the trade imbalance, but also provide some flexibility on certain key consumer items. It is worth noting that the reset with China is being led by the US Secretary of the Treasury Scott Bessent, not a national security official. The Upcoming Xi-Trump Summit In mid-May, Presidents Xi Jinping and Donald Trump will hold a summit. Tough issues are on the menu, including trade, Taiwan, rare earth minerals, and China’s heavy engagement in Latin America and the Caribbean, a region seen by the Trump White House as its sphere of influence. Venezuela, another source of Chinese oil, may also be on the table, given the US ouster of the pro-Chinese President Nicolás Maduro and the development of stronger US-Venezuelan ties, including the export of Venezuelan crude to US refineries and US oil companies active in the country. In this, China has been displaced as Venezuela’s “significant other”. China and the US will find the May 2026 discussions easier if the Iran War is not hanging over their heads. China-US relations have had considerable ups and downs in recent years; a less volatile relationship between the world’s two largest economies would benefit them as well as the rest of the world. This does not mean that the Sino-American relationship abandons its rivalry, but the discourse and economic interaction could be smoother. In this context, China’s willingness to play a constructive role in the Iran War is a positive step with larger consequences. About the Author: Scott B. MacDonald Dr. Scott MacDonald is the chief economist for Smith’s Research & Gradings and a fellow with the Caribbean Policy Consortium. Prior to those positions, he worked for the Office of the Comptroller of the Currency, Credit Suisse, Donaldson, Lufkin and Jenrette, KWR International, and Mitsubishi Corporation. His most recent book is The New Cold War, China and the Caribbean (Palgrave Macmillan 2022).

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Scott B MacDonaldBy Scott B MacDonald

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US-Iran Peace Deal Live: Iranian President to visit Pakistan on Tuesday as peace talks yield 60-day roadmap

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Advertisement US-Iran peace deal US-Iran Peace Deal Live: Iranian President to visit Pakistan on Tuesday as peace talks yield 60-day roadmap New Delhi,UPDATED: Jun 22, 2026 19:20 IST US-Iran Peace Deal News Live Updates: US-Iran diplomacy gained momentum after a marathon round of talks in Switzerland produced what mediators Pakistan and Qatar described as a roadmap for a final agreement within 60 days.

US Vice President JD Vance said Tehran had agreed to allow nuclear inspectors into the country and work on mechanisms covering frozen Iranian assets, regional ceasefires and the Strait of Hormuz. Vance said discussions on nuclear inspections could begin as early as this week, while technical teams will remain engaged even after Iran's top negotiators returned to Tehran following 18 hours of intensive negotiations.

The talks also established a communication channel to help ensure safe commercial shipping through Strait of Hormuz and a mechanism aimed at preventing renewed fighting in Lebanon between Israel and Hezbollah. Despite the diplomatic progress, tensions remained visible.

Iran had briefly closed the Strait of Hormuz over the weekend, accusing the United States of failing to uphold commitments to halt fighting in Lebanon. However, mediators said discussions were held in a constructive atmosphere and yielded encouraging progress.

Iranian President Masoud Pezeshkian is set to visit Pakistan on Tuesday in a trip expected to focus on bilateral cooperation and follow-up discussions on Islamabad's mediation efforts. Meanwhile, a fragile ceasefire in Lebanon largely held, marking the longest lull in violence in three months of conflict.

Lebanese officials reported near-total adherence to the truce despite isolated incidents, while Israeli leaders insisted any final agreement must ensure Iran cannot use future financial relief to support military activities or regional proxy groups.

Follow IndiaToday.in for the latest updates....Read More Iranian President Masoud Pezeshkian is expected to arrive in Pakistan on a one-day visit on Tuesday. (File Photo: Press TV) 2 Jun 22, 2026 19:20 IST US-Iran Deal: Iranian President to visit Pakistan Iranian President Masoud Pezeshkian will make a one-day visit to Pakistan on Tuesday, Iranian officials said.

Habib Abbasi, director-general of public relations at the presidential office, said the trip will focus on implementing previous agreements and exploring new trade opportunities. Pezeshkian is also expected to "express appreciation" for Pakistan's role in mediating between Iran and the United States, according to Tasnim news agency.

Jun 22, 2026 19:14 IST US-Iran Deal: Here's what happened so far - US Vice President JD Vance said talks with Iran made significant progress, with Tehran agreeing to allow nuclear inspectors, establish mechanisms for handling frozen assets and support efforts to manage regional ceasefires.

- Speaking after negotiations in Switzerland, Vance said discussions on nuclear inspections could begin as early as this week and confirmed that technical talks would continue in the coming days and weeks. - Iran’s senior negotiating team departed Switzerland for Tehran after 18 hours of intensive discussions, while technical experts remained behind to continue work on the Islamabad memorandum of understanding.

- Pakistan and Qatar, which mediated the talks, said Washington and Tehran agreed on a roadmap aimed at reaching a final agreement within 60 days and described the first round of negotiations as encouraging. - The two sides also agreed to establish a mechanism to help prevent clashes in Lebanon and create a communications channel to safeguard commercial shipping through the Strait of Hormuz, a vital route for global oil supplies.

- The talks followed an interim agreement reached last week and continued despite renewed tensions after President Donald Trump threatened military action against Iran and Tehran warned Washington over its rhetoric. - Iranian President Masoud Pezeshkian is scheduled to visit Pakistan on Tuesday for a one-day trip.

Iranian officials said he would discuss bilateral cooperation and express appreciation for Islamabad’s role in facilitating US-Iran diplomacy. - A ceasefire in Lebanon largely held on Monday, marking the longest period of relative calm in nearly three months of conflict between Hezbollah and Israel, although isolated incidents were still reported.

- Lebanese security officials said adherence to the ceasefire had been "almost total" since Saturday evening, despite reports of limited Israeli military activity in southern Lebanon and drone flights over Beirut. - The conflict in Lebanon has remained a major test for the interim US-Iran agreement, with Tehran previously accusing Washington of failing to ensure an end to hostilities and briefly reimposing restrictions in the Strait of Hormuz.

- Vance said progress had also been made toward reducing tensions in Lebanon, while negotiators worked to establish safeguards aimed at preventing future escalation. - Iranian Foreign Minister Abbas Araqchi said Tehran had secured waivers for oil and petrochemical exports, the release of some frozen assets and the launch of a reconstruction and development programme under the broader diplomatic framework.

- Oil prices, which surged after tensions disrupted shipping through the Strait of Hormuz, fell further after the latest round of talks, easing concerns about global supply disruptions. - Pakistani Prime Minister Shehbaz Sharif described the negotiations as constructive and said the first round of talks had concluded successfully, laying the groundwork for a broader peace agreement.

- Israeli officials signalled support for a diplomatic resolution but stressed that any final deal must ensure Iran cannot use financial relief or released assets to fund military activities or regional proxy groups.

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