China struggles to balance Iran, Israel, and US interests in Middle East

China's economic stakes are very high in the Middle East, which helps explain why Beijing has been pushing for cooler heads to prevail in the region.

Amid intensifying hostilities in recent months, officials from China have urged Iran, Israel, and all other actors to show restraint.

In a recent call with his Israeli counterpart, which took place shortly after the Israeli military attacked United Nations peacekeepers in Lebanon, Chinese Foreign Minister Wang Yi stressed the importance of keeping this international force safe and reiterated China's stance in favour of an immediate and permanent Gaza ceasefire.

Driven by a desire for stability in the region, China has valid concerns about a possible full-blown Iran-Israel war undermining its economic and strategic interests—from trade routes to investments and beyond.

The Asian giant's dependence on Middle Eastern countries for its oil and gas imports makes stability in this region critical to China's energy security and, by extension, domestic stability.

Protecting investments

Another key reason China is pushing for stability in the Middle East is that it's a crucial hub for land and sea routes for the Belt and Road Initiative (BRI), a massive multi-continental infrastructure project. Beijing has already invested roughly $1 trillion into the infrastructure, construction, and other projects associated with BRI.

The region's trade and economic areas, including the Suez Canal, are also critical to BRI's success from an energy standpoint.

In the 2015-19 period, all six Gulf Cooperation Council (GCC) states, Iran, and Iraq joined this ambitious initiative.

That's why protecting Chinese capital, enterprises, assets and manpower in the MENA region is so important for Beijing, said Manoj Kewalramani, chairperson of the Indo-Pacific Research Program and a China studies fellow at the Takshashila Institution.

Speaking to TRT World, he added, "At the same time, China is also keen to attract financing sovereign wealth funds from the region. So, any escalation of the current conflict into a larger regional war does not suit China's interests."

Within this context, it is understandable why China does not want to see Israel and/or the United States bomb Iran. Such a scenario could add countless new layers of instability to the region at the expense of China's many interests.

However, one potential silver lining for China is that further escalation of conflicts between Iran and Israel could serve to distract Washington from the Indo-Pacific while pulling the US further into the Middle East.

That in of itself benefits China, which wants less Western pressure when it comes to Taiwan and South China Sea territorial disputes.

Geopolitical balance

Previously, Beijing has maintained a balanced approach to the region, staying on good terms with both Tehran and Tel Aviv.

However, the war on Gaza in October 2023 and subsequent tensions between Israel and Iran have harmed Sino-Israeli relations, with perceptions of each other worsening over the past year.

While the Israelis are uncomfortable with Beijing's perceived alignment with Tehran against Tel Aviv, Kewalramani noted an "enduring suspicion (among Chinese policymakers) of Israel as an American partner."

If Israel and/or the US wage a military operation against Iran, China could face diplomatic pressure to choose sides, said John Calabrese, a non-resident Senior Fellow at the Middle East Institute.

This would complicate its efforts to maintain balanced relationships with both Iran and Israel, "though China's relations with Israel have already been badly damaged by what appears to many Israelis as a decisively pro-Hamas 'tilt,' " Calabrese told TRT World.

Over the past year, strain between Beijing and Tel Aviv has been increasingly visible in the UN Security Council and other international bodies where China has taken stances at odds with Israel's government such as favouring the establishment of a Palestinian state based on the 1949-67 borders, calling for a Gaza ceasefire, and recognising Hamas as a legitimate Palestinian group rather than a "terrorist" organisation.

Such positions have possibly enhanced China's image in the eyes of Global South governments and societies, albeit at the expense of Sino-Israeli relations.

"Over the past year, Beijing has essentially picked a side in this conflict. It has been extremely critical of Israel while trying to bring Arab states and Iran on the same page," Kewalramani said.

Limits of Chinese diplomacy

China received much credit for the Saudi-Iran détente agreement signed in Beijing on March 10, 2023. That watershed deal led to many discussions about the extent to which China's diplomatic efforts could prove effective in stabilising other parts of the Middle East.

But since the war on Gaza began, China, like all countries worldwide, has been unable, or perhaps unwilling to, leverage its influence to help wind down the conflict.

Notably, when it came to bringing Riyadh and Tehran into détente almost 20 months ago, China (with significant Omani and Iraqi help) was dealing with two parties who had their own interests in defusing tension between them.

The situation is fundamentally different regarding hostilities between Iran and its proxies on one side, and the American-Israeli alliance, on the other.

Nonetheless, to Beijing's credit, it has had its special envoy on the Middle East Zhai Jun engaging with the region's major actors. The Chinese have provided Gaza with some humanitarian assistance and hosted Hamas, Fatah, and a dozen other Palestinian groups. In July, the factions signed the Beijing Declaration, an agreement to end divisions.

But nothing indicates that China's condemnations of Israeli behaviour are significantly impacting the Netanyahu government.

Ultimately, the US stands alone in terms of having sufficient leverage over Tel Aviv to make a difference.

Meanwhile, as much as Iran depends on China economically, Beijing seems to lack the leverage, or possibly the desire, to pressure Tehran into changing its foreign policy.

"In general, I think China's diplomatic engagement has been high on rhetoric and low on substance," Kewalramani said.

According to Calabrese, there is "limited interest and limited scope for Chinese diplomacy" when it comes to ongoing hostilities in the Middle East involving Israel.

"In the end, it is the US that carries far more weight than China, both because of the potential leverage it can exert over Israel and the potential pain it can inflict on Iran," he said.

Powers compete Exacerbating tensions and increasing geopolitical instability in the Middle East will play out in naturally unpredictable manners. It is likely that regional chaos will bump up against China's rivalry with the US, with hostilities between Tehran and Tel Aviv further pitting Washington and Beijing's interests against each other.

Washington, which aligns with Tel Aviv, is determined to counter the Islamic Republic's influence, while Sino-Iranian economic ties remain quite strong and Beijing seems committed to protecting its BRI projects and energy imports from Iran and other countries in the Middle East.

Within this context, any war in the region that involves Iran would require Beijing to make difficult decisions about how to navigate the potentially catastrophic conflict, which could do much to intensify tensions between China and the US, vis-a-vis the Middle East.

There is no denying that the leadership in Beijing is increasingly seeing global developments through the lens of its competition with the US, which could have major implications for how the Asian power approaches the Middle East.

"Historically, (Beijing) has eschewed entanglements in the region's political disputes, choosing to instead free-ride on American security policy in the region. But this has been changing, with China's interests expanding and contestation with the US deepening," Kewalramani said. Looking ahead, the world is nervous about a large-scale war engulfing much of the Middle East. It is evident that major actors on the international stage, including China and Western powers, have fallen short when it comes to their efforts to achieve de-escalation in this region.

This reality speaks to the limits of Beijing and Washington's clout in an increasingly multipolar world, defined ever more so by great power competition.