The bystander benefits: The Iran war and China

Shortly after the bombs began to fall in Iran, claims that the Iran war is really about China quickly emerged. Some American uber-hawks, as well as a large contingent of the social media four-dimensional chess strategists, claimed that the quite erratic and confused behavior of the Trump administration in the run up to the conflict is actually part of a coherent U.S. grand strategy designed to slowly but surely to weaken China and give the U.S. a comprehensive advantage over it. The war, if to note the two most frequently made claims made as part of these claims, is supposed to destroy (or at least weaken) a key part of a supposed axis of chaos and eventually isolate China, and/or give the U.S. a decisive leverage over China by providing it defacto control over much or most of China’s oil supplies.

These arguments make little empirical or geopolitical sense. In the Trump administrations constantly shifting public justifications for the Iran war, justifications that frequently feel as if they were generated by an AI prompted to create excuses for a generic U.S. war in the greater Middle East, China has not made a single appearance. Nor was China noted as a significant factor in any of the copious media reporting about the road to this conflict over the past few months. When historians write one day the history of the Iran war it is highly unlikely that they will find countering China to be a major reason behind Trump’s decision to launch it. Likewise, more sober minded experts on Chinese foreign policy have described the deep weaknesses in the very premises of this claim. They have noted, for example, that only about one eighth of Chinese gas and oil comes from Iran and China can easily replace it if necessary, and that claims of some kind of axis of chaos are inaccurate in general- as are claims of a Chinese-Iranian outright alliance of some kind in particular.

When it comes to the likely effects of the Iran war on China, regardless of the eventual overall outcome of the war, or the fate of the Iranian regime in this war (or in the near future), it is already clear that China, rather than suffering losses as a result, is actually very likely to overall benefit from it. To clarify, the Chinese government is, from all indications, very unhappy about the eruption of the Iran war due to its general and longstanding opposition to such western regime change wars. Likewise, although China has recently built up significant oil reserves in preparation to various possible contingencies, it is clearly quite wary of the possible economic disruptions resulting from a partial or full blockade of the Hormuz straits for a significant length of time and would prefer to see this conflict to end very soon. With those things noted, the Iran war is nevertheless likely to eventually benefit China overall all across the board on the military, diplomatic, geopolitical and economic aspects. Trump will, yet again, be worthy of the ironic nickname which he has been given a years ago by some Chinese social media users- Chuan Jianguo (川建国) or Trump the (Chinese) nation builder.

Militarily the US has just given China a close, inside look into its likely battle plans and its actual military capabilities in case of a future war between the two countries. The war in Iran is the first interstate war since the 1990-1991 Gulf War that the U.S. military is fighting an adversary that has extensive anti-aircraft and anti-ship capabilities as well as the ability to attack and damage U.S. bases in other nearby third countries. It is being fought by the U.S. using mainly the U.S. air force and navy- the two main components of the U.S. military most likely to be involved in most plausible future U.S.-China wars. It involves Iran heavily using, among other weapons, drones and conventional ballistic missiles with overall accurate guidance systems- two weapon systems that the PLA has been extensively developing as well. As a result, the U.S. is fighting the Iran war using many of the same exact military capabilities, operational procedures, and tactics that it would use say in the case of a U.S.-China War in the South China Sea or over Taiwan.

Observing fighting by third parties is one traditional way for militaries to learn about these countries capabilities and tactics and improve their own capabilities in response. Indeed, in the 19^th century and early 20^th century many interstate and even some conventionally fought civil wars (such as the U.S. civil war) even had contingents of military observers from uninvolved third countries embedded within frontline military camps of one or both of the fighting sides that were sent to these wars exactly for this purpose. More recently, observing the first Gulf War through more indirect ways led many uninvolved third parties, such as India and China, to institute major military reforms in response to their close observations of U.S. and Iraqi tactics and fighting. For an army such as the PLA, which has not fought a war in more than forty years, such information is especially useful and valuable. Through fighting the Iran war the U.S. is therefore providing China with something quite valuable that China would have been highly unlikely and unable to gain in any other way- namely much of the U.S. battle plans and tactics of the U.S. military in the event of a U.S.-China war, the U.S. actual capabilities to implement them in practice, as well as the overall effectiveness of some possible ways to counter these U.S. tactics. The PLA, no doubt, will be in a better shape eventually as a result of observing the Iran war.

Geopolitically the war strengthens China’s hand by making one of its main geopolitical tools, namely its rare earths exports, more powerful vis-a-vis the U.S..[1] The Chinese rare earth export controls, imposed in response to Trump’s April 2025 “liberation day” tariffs, were one key reason for the TACO Trump pulled on many of those tariffs on China a few weeks later. It was also one key reason for the general shift in U.S. policy towards China last year from an outright, full-throated direct attack on the Chinese economy to an attempt to stabilize U.S.-China relations while looking for more indirect attack vectors. From the existing reporting on this topic, once the Trump administration was made aware of the potential damage that the rare earths export controls would cause to some American civilian manufacturing sectors, as well as to U.S. arms manufacturers, it felt like it had no choice but to back down, at least in the short-term, from some of its plans vis-à-vis China in order to avoid severe damage to the U.S. military and economy from a complete Chinese rare earths cutoff. The resulting U.S.-China trade truce greatly loosened Chinese export controls on rare earth- but China is obviously prepared for their reimposition if needed. Although there has been much talk in the past year within the Trump administration (and in Europe) about dealing with this Chinese chokepoint, and some initiatives in this regard were recently announced, very limited on the ground progress has been made in practice by the U.S. in increasing its non- Chinese supplies of rare earths.

Many of the U.S. weapons now being expended as part of the war, and some of the defensive systems damaged in the fighting, require rare earths of various kinds as one key, hard to substitute production input. When the war ends replacing these weapon systems will significantly increase demand by U.S. arms manufacturers for these materials. For example, according to one estimate, for the U.S. arms manufacturers to merely replace two of the radars already destroyed by Iranian missiles in its attacks on Bahrain, will require 77.3 kilograms of one such rare earth, Gallium. China produces 98% of the annual global production of Gallium- with the rest of the world only producing 2% or around 15 tons of it. Replacing these two radars alone will therefore require somewhere around 0.5% of the worlds (non- Chinese) annual production of Gallium- much of which is, of course, already allocated for many crucial civilian purposes.

The existing stockpiles that the pentagon has of various rare earths, and the other sources it probably has of acquiring more of them, will be even less sufficient for U.S. military production needs then they were before the Iran war. That means that increasing Chinese exports of rare earths to the U.S., or at least avoiding a situation where they could be reduced or cut off again by China, will become even more important for the Trump administration then it was before the war. Additional U.S. concessions to China, or at the minimum even greater hesitancy on the side of Trump to disrupt the current shaky truce through a major barrage of export controls or other major U.S. acts that would anger it, are quite likely. If to use one of the Trump administrations favorite idioms, the Iran war has just upgraded China’s rare earth cards from a straight flush into a royal flush.[2]

Diplomatically[3] the Iran war is significantly boosting Chinese international messaging in two key ways. First, China has long presented itself in its messaging as a peace-loving nation that champions global stability while presenting the U.S., in contrast, as the exact opposite of that. With much of the world, as well as most Americans, already strongly opposed to Trump starting this conflict, while China is not, for example, fighting any wars whatsoever, this Chinese message will probably have an even stronger resonance then it had beforehand.

Secondly, as part of its messaging war against China, the U.S. was planning to use, as it did a few months ago verses India, China’s heavy purchases of Russian gas and oil. Well aware that China, unlike India, would be highly unlikely to cut these purchases regardless of U.S. pressures, this U.S. message could have potentially shown China in a negative light to some international audiences. With the Trump administration, in order to prevent a big increase in oil prices due to the Iran war and the Iranian blocking of the Hormuz straits, already being forced to let India purchase Russian oil again, and the EU likely to increase its oil and gas purchases from Russia as well as a result, this U.S. message will lose, if eventually used, most of its potency. Chinese public diplomacy is likely to have a good year of the Horse.

Economically the conflict is, in the medium term, helping China’s economy by making one key set of Chinese exports, clean energy exports and EVs, even more attractive to various countries around the world. Over the past two years purchases of Chinese solar panels, batteries, and EVs have grown rapidly across much of the global south as well as parts of the developed world. These purchases have been driven mostly by economic factors. These factors include the fact that renewable energy is now economically competitive with fossil fuels for power generation (both in price per unit of energy and in set up costs), that most Chinese EVs are as good as ICE cars in overall driving experiences and competitive or cheaper on price, and that for many developing countries with dysfunctional central power grids or with grids with limited geographic coverage, solar (frequently coupled with batteries) provides a relatively quick and reliable way for many local private individuals, and businesses, to gain overall reliable “off the grid” power supplies.

The Iran war is now highlighting another very good reason to purchase these products- a geopolitical one. One longstanding problem with depending on gas and oil for power generation and transportation infrastructure, unless one’s country is fully self-sufficient in this regard, is that said fuels need usually to be regularly supplied in short intervals from regions and countries plagued with instability and hence prone for possible supply cutoffs. Renewable energy, in contrast, is largely a one-off purchase that, with some concurrent purchase of sufficient replacement parts, can usually last for years without the need for any further purchases. Likewise, EVs can use electricity from many possible power generation sources aside of natural gas and oil.

The Persian Gulf oil and gas producers were widely seen in the past decade as the one major stable and reliable source of fossil fuels free of significant geopolitical issues. The Iran war however illustrates that even they, for exogenous reasons well beyond their control, are not able to fully guarantee regular supplies and avoid all potential disruptions. The Iran war, coming on top of the Ukraine war and the resultant sanctions and fighting disrupting international access to Russian oil and gas supplies, and the U.S. increasingly treating its own oil and gas production as a potent geopolitical chip, makes it clear to much of the world that is not already self-sufficient in this regard that there are no major external source of gas and oil free of potential future geopolitical disruptions.

The Iran war will therefore encourage national governments, corporations, and private individuals to increase even further their purchases of EVs, batteries, and solar panels, also as a way to geopolitically proof their energy supplies.[4] With Chinse manufacturers the predominant (and low cost) providers of these goods, most of these purchases will come from them. It will also make many countries more amendable for letting these Chinese products into their markets without tariffs or other major restrictions in the short term- a major Chinese geo-economic policy goal.

Even better for China, the Iran war will help it to deal with a significant problem that it has in its clean tech (among others) sectors. The Chinese government has been recently focusing on reducing what it calls involution in these (among other) economic sectors- namely the cut throat internal competition among private firms seen as excessively reducing profit margins even for the best Chinese manufacturers. This is a problem that the Chinese government (and other economists) see as helping fuel deflation within China. Stronger international demand for Chinese made solar panels, batteries, and EVs will create Goldilocks conditions for the Chinse government to reduce involution within China in these sectors, making it much easier for it to raise prices (and the profit margins) of the Chinese manufacturers in those sectors without either reducing Chinese firms’ international competitiveness and/or forcing the retirement of much up to date Chinese manufacturing capacity in these sectors. Trump, in launching this war, just gave China a helping hand with a key sector of its economy.

Given all of these factors, improving the U.S. position vis-à-vis China is highly unlikely to be one of the outcomes of the Iran war. This is case even if it ends somehow with some kind of partial U.S. success- or a collapse of the Iranian regime sometime shortly afterwards. The Iran war is likely to end, as many wars in human history have ended, with some of the countries who wisely succeeded in avoiding getting militarily involved in some manner gaining significantly, if not the most, from them. The American uber-hawks and the four-dimensional chess strategists should think a bit more carefully about the wider effects of the U.S. conflicts that they support before making such claims.

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[1] Some have argued that an American victory in Iran, or the mere exhibit of U.S. military capabilities and might will intimidate China’s leadership, leading Trump in his future interactions with China to hold (literally) the trump card. Given however that an Iran-style U.S. military attack on China is simply infeasible in practice for many reasons well known to the Chinese government (such as the Chinese nuclear arsenal), Trump is highly unlikely to successfully intimidate China in this regard.

[2] Some critics of the Iran war have expressed concerns that the depletion of key U.S. weapon systems will create a window of opportunity that would lead to a Chinese invasion of Taiwan. The author thinks that that is very unlikely in the foreseeable future, regardless of the length or eventual outcome of the Iran war, for a few reasons (worth a wider treatment in a separate piece)- such as the clear perception of the Chinese government of the availability of other peaceful (and much less costly) options to eventually achieve it, and the lack of evidence (despite frequent inaccurate claims of one in 2027) of any kind of self-imposed or otherwise “hard” deadline to achieve that goal in the near future.

[3] Likewise if China succeeds, as it seems to be currently trying, to play a role in an eventual ceasefire agreement ending the war (if the war ends in that manner) that will, of course, enhance its international reputation as well.

[4] That may well be, quite ironically, Trump’s only positive environmental legacy.