The Future of the Chinese Economy and the Iran War

CHINA ADVISORY - Report 30 Apr 2026 by Andrew Collier

The Iran War has both short and long-term implications for China’s growth and global position.

1) The immediate economic consequences due to disruption to oil imports is the lesser of China’s concerns due to stockpiling and alternative energy.

2) The more significant consequence is the impact on exports. In the past decade and a half, the contribution of exports to China’s growth has doubled; thus, geopolitical instability is a threat to China’s growth and domestic employment.

3) Iran offers lessons to Beijing on its Taiwan strategy. Some analysts say the Middle East has distracted the Trump Administration from Asia, leaving room for Chinese military expansion. I disagree. The ability of a small state to fend off a larger one – which China already has seen in Ukraine – provides a valuable warning to China that a takeover of Taiwan would be complicated.

In general, a volatile geopolitical environment is not conducive to China’s focus on economic growth and domestic stability. China is no longer a “bad actor” by seeking to destabilize the international trading system; now it is increasingly favoring the rules-based order. However, it does seek to “bend” the rules to suit its mercantilist policies.

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