China’s latest plan to boost its economic growth was written largely before the US and Israel launched the most far-reaching war in the Middle East in decades.
But when Chinese Premier Li Qiang stood up in Beijing’s Great Hall of the People on Thursday to deliver an opening speech to those called. Two Sessionssome last-minute updates appeared.
While stressing domestic stability in the world’s second-largest economy and referring to ongoing trade problems with the United States, Li also noted that the “foreign economic environment” has become even more “complex”.
By “complex” Qiang could mean that the leadership of Iran, a strategic body and major oil supplier, has been beheaded and that the country is under bombardment from two of the world’s most advanced armies.
China has cut its 2026 economic growth target to 4.5 percent at the annual ‘Two Scenes’ conference in Beijing, where senior politicians plan political, economic and military strategies amid US trade tensions, and uncertainty over a Middle East war.
A few years before the attack on the US and Israel, China provided Iran with important economic and political channels.
China has bought Iranian oil despite the dangers of Western sanctions. It has also supplied Iran with key components for its ballistic missile and drone programs. And in 2021, China and Iran signed a long-term economic cooperation agreement.
Collectively, China’s aid has allowed Iran to continue to field a formidable military while avoiding the full impact of isolation from the global economy.
China stayed on the sidelines
After the bombs began to fall, Chinese officials condemned the assassination of Supreme Leader Ayatollah Ali Khamenei, criticized the US for its “military strikes” and sent a special envoy, Zhai Jun, to try to stop the war.
But it is what China does not do that is most remarkable.
Despite being a major customer of Iranian oil – 90 percent of its production is sold in China – and a major trade partner with the Persian Gulf countries now immune to Iranian missiles and drone attacks, President Xi Jinping has given no indication that China plans to be much more than a bystander in the conflict.
The latest economic systemn emphasizing the resilience and independence of China aims for annual GDP growth of five percent and aspires to dominate the emerging fields of robotics, renewables and artificial intelligence. With this plan, the country’s leadership seems to be able to withstand any short-term economic shock from the oil crisis – and if it happens, anything that happens will not have a significant impact on their important economic goals.
In addition, positioning the country as a safe haven for war reinforces China’s narrative as a predictable, reliable trading partner, analysts say.
“China has been preparing for this for a long time,” said Alex Zheng, a consultant at China Macro Group in Shanghai who specializes in China’s political economy.
China has a “bulk” in the economy, he said, because it has been building oil reserves that will protect the country from rapid price increases. Zheng says it could also turn to Russia to resolve any oil disruptions from Iran or the Gulf.
“Probably 50 percent of energy imports from China [are] from the Middle East, compared to maybe 80 or 90 percent a decade ago,” Zhou told CBC News.
Alessandro Arduino, a UK-based Royal United Services Institute fellow and China expert, agrees.
“China, for a limited time, has the opportunity to hold oil and gas strategies to reduce inflation – but it cannot do that forever,” he said.
“China needs stability and less uncertainty to develop what it plans in the next five-year development plan.”
Another important thing
Unlike Western countries, the Chinese government is taking a one-way approach to economic growth.
It issues annual reports and sets targets during the Bicentennial – meetings of the highest legislative and advisory authorities – and uses the weight of the country’s vast population and natural resources to try to achieve them.
While the latest five-year plan did not directly address conflicts in the Middle East, it emphasized that China’s top security priority remains a potentially contentious area closer to home – the Taiwan Strait.
In unusually strong language, the document signaled China’s intention to “unify” Taiwan and said the Xi government would “resolutely fight” – rather than simply “oppose” – any independence for Taiwan. The Two Sessions draft also said that China intends to accelerate the “cause of national reunification” through increased military spending.
Taiwan is a democracy that most of the world does not officially recognizeit shines as an independent country, and yet it still maintains deep trade and political relations.
Xi had previously set 2027 as the date for China’s military to complete its modernization efforts, which some US observers interpreted as a timetable for a possible naval attack or blockade of Taiwan’s ships.
What may improve the war in the Gulf from the point of view of the Chinese is the upcoming visit of US President Donald Trump to Beijing, which the White House has indicated will begin on March 31.
China seems to have prioritized developing and stabilizing economic relations with Washington over any immediate intervention on behalf of Iran in the Persian Gulf.
Together, the two countries make up 43 percent of the world’s GDP, and despite Trump’s tariffs and other obstacles, the US remains China’s most important trading partner.
Using forecasting
As China’s domestic market struggles, the US is a critical – arguably irreplaceable – export market. At the same time, China remains dependent on it for many of the materials used to power artificial intelligence, including advanced semiconductors.
“I think China still wants to say [to Trump]’Okay, let’s talk. Let’s meet. Let’s see what we can do,’” said Henry Wang, founder of the Center for Globalization and China in Beijing.
Trump’s inherent unpredictability has given China another diplomatic and economic opportunity that Xi appears intent on exploiting, says Arduino of RUSI.
“Predictability is something that China wants to offer,” Arduino told CBC News.
Canadian Prime Minister Mark Carney, along with the leaders of Germany, Australia and the United Kingdom to name a few, have visited Xi in recent months to try to diversify their markets away from the US.
After years of strained relations, Prime Minister Mark Carney has met Chinese President Xi Jinping in Beijing. Carney hailed a tentative agreement with China to cooperate more on clean and conventional energy, but the Canada-China tariff dispute remains unresolved.
Peter Francopan, professor of world history at Oxford University, recently on his Substack that before Trump’s visit, Chinese naval and air activity around Taiwan has decreased significantly – suggesting that although China’s claims on the island remain intact, the optics of a military battle around it may have, at least temporarily.
“Dialing down” the apparent military pressure around Taiwan helps reinforce Beijing’s new narrative and present China as a more cautious and reliable actor, writes Francopan.
China may still try to play a role as a mediator in the US-Israel war against Iran, although it is unclear whether either side wants that yet.
In Iran, however, the realization is becoming clear: in Beijing’s pursuit of a new global order, a strategic partner in the Persian Gulf may be nice to have – but a stable economy and a productive meeting with Donald Trump are absolute requirements.
