The Israel–Iran ceasefire is a relief for China. But the war exposed Beijing’s lack of leverage 

China will be forced to continue hedging its bets as it adjusts to a fundamentally changed Middle Eastern security outlook.

Expert comment Published 30 June 2025 4 minute READ

Ahmed Aboudouh

Associate Fellow, Middle East and North Africa Programme

China has scored significant wins from the 12-day Israel–Iran war. It can now buy more Iranian oil without being sanctioned. It can secure future contracts to rebuild Iran’s economy and industrial base. And it will be satisfied to see the United States once again distracted by events far from the Indo-Pacific. Importantly, China can now guarantee Iran will not pivot toward the West after the military humiliation it received.

However, the conflict did expose some weaknesses in Beijing’s policy. China was unable to offer itself as a mediator, exposing its lack of leverage over Iran – because of mutual mistrust and a lack of depth in the two countries’ economic partnerships. Beijing also showed it ostensibly has no influence on Israel. 

The war has potentially also created a ‘Hormuz Dilemma’ for China, where its energy security and national development becomes uncomfortably vulnerable to future flare-ups in the Gulf.

In fact, all potential post-war scenarios indicate that increased escalation in the Middle East will heighten pressure on Chinese interests. Consequently, if China fails to adopt a more proactive security approach in the region, its ability to influence events will continue to diminish.

Beijing’s lack of influence

China’s trade and investments in the Middle East remained largely unscathed. However, had the war lasted longer and spiralled into a regional conflagration, Beijing’s lack of leverage with the warring parties would have left it unable to intervene effectively to safeguard its interests.

China’s reluctance to fully support Tehran stemmed from concerns over Iran’s military feebleness. 

China therefore hedged its bets. Chinese Foreign Minister Wang Yi condemned Israel’s attacks on Iran during a phone call with his Iranian counterpart on 14 June. But he stopped short of doing so in a phone call with his Israeli counterpart on the same day. President Xi Jinping maintained the same policy, offering to play a ‘constructive role’ in de-escalation, without explicitly suggesting mediation. His four-point proposal for principles to de-escalate tensions avoided direct condemnation of Israel.

China’s reluctance to fully support Tehran stemmed from concerns over Iran’s military feebleness. Israel successfully launched strikes on nuclear sites, missile launchers, and military manufacturing facilities with minimal loss, making it unrealistic for China to invest in an Iranian victory.

China appears to have decided against a diplomatic campaign against Israel, akin to its stance since the Gaza conflict began. Beijing may have believed that doing so would endanger its economic and diplomatic ties in the region. Instead, China was compelled to accept new conditions arising from the complete breakdown of Iran’s regional strategy, viewing this as a strategic necessity.

The proliferation threat

Israel’s military achievements will have unsettled Beijing in another respect. A leaked US bomb damage assessment report indicates that the US and Israeli strikes on Fordo and other vital Iranian nuclear sites did not completely ‘obliterate’ Iran’s nuclear program, as President Donald Trump claimed. 

Multiple authoritative sources suggest that Iran’s highly enriched uranium may have survived the attacks. Should Iran now plan to use that material to rebuild its nuclear capabilities it would be a significant concern for China, potentially igniting a regional nuclear arms race.

It would also raise the probability of the US and Israel resuming military strikes on Iran. President Trump explicitly stated his readiness to order such an attack, asserting he would do so ‘without question’ if Iran enriches uranium to critical levels.

China wouldn’t mind seeing the US bogged down in another intervention like that of Afghanistan or Iraq. Such a conflict might create the space and time for Beijing to gain the upper hand in the Indo-Pacific. 

But the 12-day war showed that the US and Israel could delay Iran’s nuclear programme without the need for a protracted commitment. This means the optimal scenario for China involves the US and Iran achieving a diplomatic agreement that diminishes the likelihood of a regional conflict.

The war proved to China that the US under Trump is an unpredictable partner. And it’s unclear how China will apply the lessons of the war to Taiwan. Trump pushed for a ceasefire and was unwilling to involve the US in a long war. Beijing’s strategists might conclude that the US will hesitate to respond to a level of heightened military pressure on Taiwan as part of a Chinese ‘salami-slice’ strategy.

‘The Hormuz Dilemma’

In its response to US strikes, Iran targeted the Al Udaid US military airbase in Qatar with a missile strike. That was largely symbolic. But it proved Iran would not hesitate to drag the whole region into conflict. 

On 22 June the Iranian parliament approved the closure of the Strait of Hormuz, leaving the final decision to the National Security Council. This decision, if taken, would amount to a strategic suicide for Iran. But it would also hurt the already struggling Chinese economy significantly: between 30 to 45 per cent of China’s oil imports passes through this strategic chokepoint. 

Tehran’s repeated threats to close the Strait create a ‘Hormuz Dilemma’ for China, holding its energy security hostage to Iran and Israel’s sabre rattling.

Tehran’s repeated threats to close the Strait create a ‘Hormuz Dilemma’ for China, holding its energy security hostage to Iran and Israel’s sabre rattling. That would replicate its existing ‘Malacca Dilemma’ in the South China Sea, where US control of the Malacca Strait threatens China’s oil imports – 80 per cent passes through the strait. 

China can’t afford to ignore this new risk and will want to seek alternative routes to secure its imports. But high risks plague all possible solutions.

An invalid governance model?

Additionally, regional powers may well conclude that China’s risk-averse response to the war indicates its mediation style is ineffective in the context of an active Middle Eastern conflict – denting the optimism previously created by China’s successful mediation of a rapprochement between Saudi Arabia and Iran in 2023. The implications for China’s efforts to promote its governance model could be serious. 

The principles underpinning the Global Security Initiative and the Global Development Initiative, such as ‘common, comprehensive, cooperative and sustainable security’ and ‘peace through development’ appear futile at best in the highly antagonistic and securitized Middle East. 

China’s likely approach

China is expected to maintain its hedging strategy to navigate future turmoil in the region. That could include efforts to fix ties with Israel, while encouraging Iran to reach a nuclear deal with the US – and persuading Tehran not to withdraw from the Non-Proliferation Treaty. China could also use Iranian oil imports to help Iran generate resources to stabilize its economy.

China will likely be reluctant to accelerate its (relatively insignificant) investments with Iran, despite the two countries’ 2021 Comprehensive Cooperation agreement. This may benefit Arab Gulf states and align with US and Israeli preferences.

Regardless of China’s response over the coming months, the Israel–Iran war has demonstrated a clear principle. For Middle Eastern countries, business partnership with China is a rational choice that aligns with their economic diversification agendas. 

But when the missiles start to fly, it is the US that remains the most reliable security guarantor. Ironically, it also provides the best protection for Chinese interests in the region.