The cost of oil reached levels not seen in four years on Monday, a week after the The United States and Israel launched an attack against Iranally and financial partner of China. The fighting has halted virtually all traffic through the Strait of Hormuz, a critical passage for China’s energy and goods.
China has a lot to lose in an escalating conflict. In Iran, China has found a cheap source of oil in recent years. Across the region, he found governments interested in his knowledge of renewable energy and technology. China became dependent, like much of the rest of the world, on oil and gas supplies from the Middle East.
The region’s importance to China became even more pronounced last year, as the country’s trade rivalry with the United States intensified and it was unable to sell many products to the American market, once China’s largest market. The United Arab Emirates became the fastest growing market for Chinese cars. Demand for Chinese steel from Saudi Arabia and its neighbors doubled. China’s exports to the Middle East grew almost twice as fast as its exports to the rest of the world in 2025.
Chinese investment is also growing faster there than anywhere else in the world.
“The region is basically seen as the biggest growth potential for China,” said Dan Wang, China director at Eurasia Group. From 2019 to 2024, China invested $89 billion directly in the Middle East, Wang said.
These trade ties are now in the line of fire as the US and Israeli militaries attack Iran, and Iran strikes back at ports, ships, pipelines, desalination plants, data centers and other critical infrastructure across the region. Maritime transit not only of energy but also of goods transported in gigantic container ships through the Strait of Hormuz is in danger.
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China also has credit at risk, having provided loans for contracts and projects across the region.
The share of China’s global loan and grant portfolio to the region will double to 10% in 2023, according to AidData, a William and Mary research institute in Williamsburg, Virginia. State financial institutions provided loans to oil refineries and seaports that finance the production and transportation of raw materials.
In Qatar, Chinese banks are helping finance and build a major expansion of a liquefied natural gas production facility. Chinese state-owned oil giant Sinopec has a stake in the facility’s North Field East expansion project. The facilities were attacked last week.
Chinese investors have financed the expansion of Haifa port in Israel and Khalifa port in the Emirates, and the resulting terminals are owned and operated by Chinese companies.
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In Iran, dozens of Chinese companies have financed, built and managed infrastructure, power grids and petrochemical plants.
China is also the largest investor in desalination in the Middle East, where drinking water is scarce. Almost all of the projects have been built by China’s Power Construction Corporation, with projects in Saudi Arabia, the United Arab Emirates, Oman and Iraq.
“There are so many countries and so many assets spread across the region,” said Brad Parks, CEO of AidData. “We could see from the deal flow that there was a lot of enthusiasm to work more and more in the Middle East.”
Major Chinese tech companies, including Huawei, Alibaba and Tencent, have set up offices in Dubai, United Arab Emirates, where employees work in a complex that includes Microsoft, Meta and Google. Three Chinese smartphone brands (Transsion, Xiaomi and Honor) are gaining market share in the region, trailing South Korean giant Samsung, according to Omdia, a technology research firm.
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It is not just big companies that are seeking fortunes in the Middle East.
In 2018, Haiyang Zhang, a Chinese businessman, moved to Dubai, the largest city in the Emirates and a hub for finance and international visitors. This year he left a job at a Chinese company to start his own business helping Chinese investors expand in Dubai. Some of its partners are in the new energy sector. Zhang believes Dubai remains a safe place for certain Chinese investors to put their money, he said, but he worries about the impact of sustained conflict.
Over the past week, several Chinese companies with a growing presence in the Middle East have ordered their employees in the region to work remotely. On March 1, tech giant Baidu said it would suspend its robotaxi services in the Emirates. Chinese food delivery platform Keeta has indicated that its services in the region may be temporarily suspended or limited.
China’s Foreign Ministry said last week that one Chinese citizen had died and more than 3,000 citizens had been evacuated from Iran. He has not said how many Chinese citizens there are in the region.
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Middle East oil is critical to China’s energy security. It imports a little more than half of its maritime crude from the Middle East, and about a quarter comes from Iran. Like countries around the world, China faces higher energy costs as global prices rise.
China is the largest buyer of Iranian oil, which is under U.S. sanctions, although imports accounted for just over 13% of the maritime crude it received during 2025, according to Kpler, an industry data firm. China also operates three major pipelines, two of which transport oil from Russia and Kazakhstan. Still, a loss of Iranian supply would force China to look for other sources, which would be much more expensive than the discounted oil it bought from Tehran.
Despite China’s deep financial ties in the Middle East, it faces the same risks as other countries, including the United States, that are heavily invested in and dependent on the region.
China condemned the attacks by Israel and the United States and called for an end to the fighting. As the conflict escalated, China’s top diplomat, Wang Yi, held calls with his counterparts in Iran, Oman, Israel, Saudi Arabia and the United Arab Emirates.
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But threats from Iran have caused a drop in traffic in the Strait of Hormuz. And it’s not just the energy that is blocked. Chinese shipping giant Cosco suspended bookings through the strait and Dutch company Maersk suspended certain critical routes in the Middle East.
Zhang, the Chinese businesswoman in Dubai, said she watched the evacuation of American companies and executives from the region, and to her that means an opportunity.
“Their motivation to evacuate,” he said, “is much greater than that of the Chinese.”
This article originally appeared in The New York Times.
