What China thinks about the escalating Iran-Israel conflict

BEIJING — The recent flare-up in Middle East tensions isn’t denting Chinese business optimism about opportunities in the region.

Chinese shipments to Dubai’s logistics hub have risen by 20% this month from a year ago, as locals stock up on batteries and daily necessities, according to estimates from Bear Huo, China general manager at FundPark, a fintech startup that lends money to small Chinese businesses selling overseas via internet platforms.

“Overall, Chinese merchants are relatively optimistic,” he said Monday in Mandarin, according to a CNBC translation. That’s partly due to the relatively recent rise of the Middle East as a fast-growing market, he added.

Chinese companies have increasingly turned to the region in the last few years — whether to raise money from local investors or to tap a new market for electric cars — amid trade tensions with the United States. On the geopolitical front, Beijing helped Riyadh and Tehran restore diplomatic relations in 2023.

Huo’s view is that the Iran-Israel tensions will end relatively soon, given that even the U.S. strikes have targeted specific strategic sites, and as fighting isn’t spread out along a border as in the drawn-out conflict between Russia and Ukraine.

Nevertheless, risks remain elevated as the Dubai port is right across the Strait of Hormuz from Iran.

Ships are moving more slowly and there are fewer flights, Huo said. He said he does not know where products from Chinese sellers go to after they arrive in Dubai, and added that the company doesn’t directly do business with Iran because of sanctions.

China’s Ministry of Foreign Affairs said it “strongly condemns” the U.S. attacks on Iran over the weekend, while calling on all parties involved to “reach a ceasefire as soon as possible.”

China’s trade with Iran has dropped sharply in the last two years, according to customs data accessed via Wind Information. The U.S.-sanctioned crude exporter has relied significantly on Beijing’s purchases.

“A more stable Middle East serves China’s economic and strategic interests,” said Yue Su, Beijing-based principal economist for China at the Economist Intelligence Unit.

“Beijing will be interested to position itself as a constructive power capable of contributing to global stability,” she said. She noted that Chinese businesses will likely interact cautiously with Iran, given concerns over possible secondary sanctions.

State news broadcaster CCTV aired interviews Sunday of Chinese citizens grateful for Beijing’s efforts to evacuate them from Iran.

While there are strict warnings on U.S. citizens traveling to Iran, Chinese citizens have been able to visit Iran without a visa for three weeks, for tourism or business. Most Chinese nationals who were in Iran have been evacuated, the Chinese Embassy in Iran said Monday.

On an even more optimistic note, if the latest escalation results in a relaxation of U.S. sanctions on Iran, tens of thousands of Chinese businesses would likely rush to the Middle Eastern country to build up its tourism, real estate and overall infrastructure, said Qin Gang, Beijing-based founder of a consultancy that translates as Ode & Song Cultural Industry.

He said he visited five cities in Iran in 2013 at the invitation of Mahan Air, a private-sector Iranian airline.