The war in Iran has strengthened China's economic position, according to the NYT
The military conflict in Iran and the de facto blockade of the Strait of Hormuz have had a significant impact on the economies of Asian countries, but China has been able to turn the crisis to its advantage. Experts note that Beijing has gained a number of strategic advantages in the global market, strengthening its position as one of the world’s key manufacturing hubs.
The Chinese economy’s resilience is underpinned by substantial reserves of oil and natural gas, as well as the rapid development of the clean energy sector.
As a result, the country has managed to avoid the sharp rise in inflation and political turmoil experienced by many other nations in the region.
China has also been able to effectively mitigate the effects of external shocks through government price regulation, a subsidy system, currency controls, and export quotas on petroleum products. In particular, in May, oil imports to China fell by more than 30% year-over-year, freeing up additional supplies for other participants in the global market.
The crisis also helped strengthen Beijing’s international standing. Demand for Chinese solar panels, batteries, and electric vehicles surged as many countries began seeking alternative energy sources and ways to reduce their dependence on traditional fuels.
At the same time, the situation proved to be much more challenging for most Asian countries. The region receives about 80% of its oil and 90% of its natural gas via the Strait of Hormuz, so the prolonged rise in energy prices dealt a serious blow to their economies.
Additional difficulties were caused by shortages of critical resources, including oil for the chemical industry, helium for the production of semiconductors and medical equipment, and sulfur, which is necessary for metal refining and battery manufacturing.
Despite statements that agreements have been reached to cease hostilities and resume shipping, new reciprocal attacks and escalating tensions between the U.S. and Iran continue to pose risks to international trade. As a result, companies are forced to increase their insurance costs and use longer logistics routes.
The consequences have been particularly severe for India, Japan, and the countries of Southeast Asia. In India, rising fuel and fertilizer prices have put additional pressure on the agricultural sector, which employs millions of people. In Japan, rising energy prices have increased the burden on the national budget, while shortages of certain resources have affected the automotive industry.
In the Philippines, a state of emergency was declared due to energy problems, while in Indonesia, nickel production declined due to a shortage of sulfuric acid.
As a result, many countries in the region began to actively purchase Chinese solar panels, electric vehicles, and other clean energy technologies, which further strengthened China’s position and slowed the process of shifting production from China to other Asian countries.
This is reported by The New York Times.
On June 26, global oil prices fell by about 2% due to an increase in the number of tankers passing through the Strait of Hormuz.
Exports of mineral fertilizers through the Strait of Hormuz have shown rapid growth, bringing supply volumes to the global market back to levels recorded before the military escalation began.
The U.S. and Iran will establish a $300 billion fund to rebuild the economy — Reuters.
Peace on Tehran’s Terms: Why the Deal with Iran Resembles a U.S. Capitulation.
