Plenty of world leaders would have been pleased to see the back of Ali Khamenei, Iran’s supreme leader. But China’s foreign minister Wang Yi wasn’t among them.
According to an official readout of his call with Russian foreign minister Sergei Lavrov on Sunday, Wang criticised the “blatant killing of a sovereign leader”. He also branded the US-Israeli strikes on Iran as “brazen” and “unacceptable”.
His anger came as no surprise. As with Venezuela in January, Donald Trump’s decapitation strategy has targeted one of China’s most critical suppliers of oil.
China imports up to three-quarters of the oil it needs. Of this, last year about a third was ultimately bought from Iran or Venezuela, albeit often rerouted through pliable partners such as Malaysia.
The US president’s military adventurism is exposing China’s vulnerability and dependency, as the world’s second-largest consumer of oil and the largest importer.
While the US shale revolution of the 2010s has allowed America to turn itself an energy fortress, China remains at the mercy of the global market.
“China is significantly reliant on foreign fossil fuels, leaving it exposed to disruptions stemming from instability and geopolitical competition,” the Centre for Strategic and International Studies (CSIS) says in a recent report.
Xi Jinping, the Chinese president, knows it. And he doesn’t like it.
Between 2013 and 2024, CSIS calculates, Xi mentioned “energy security” in at least 180 speeches and official engagements. You can bet most were about China’s need to improve it.
As the Chinese Communist Party apparatus this week puts the finishing touches on the country’s next five-year plans, architects must reckon with the fact that Trump has fatally undermined two crucial sources of oil: Venezuela and Iran.
China began buying Iran’s oil in earnest in the early 2000s, as its industrial revolution gathered steam. But Iranian crude became much more attractive after the country came under sanctions in 2012. The Chinese, taking advantage of the sellers’ desperation, could bargain down the price.
A system developed in which the Chinese used “dark fleet tankers” that skirted the sanctions. Arriving in China, it was marked as having come from Malaysia or the Middle East.
The customers were not big state-owned refiners but small “teapot” operations. They paid the suppliers renminbi, using smaller banks. The Iranians would presumably either park the proceeds in a Chinese bank and/or spend it on Chinese goods.
The trade burgeoned, giving the Chinese access to a cheap, plentiful supply of oil that nobody else could or would buy.
It was a similar situation with Venezuela, where the oil industry has been under varying degrees of sanctions since 2019.
Now, China faces a painful reversal of this dynamic: instead of access to a cheap and plentiful supply of oil, the country faces a shortfall that must be made up on the open market at a time when prices are surging.
It is not hard to see why Xi is therefore seeking to forge a path to energy independence. And he is pulling every lever at his disposal.
This includes ramping up domestic oil and gas, more coal and a step-up in nuclear. But his biggest bet is on renewable energy such as wind and solar.
