China’s Iran Anxiety Before Trump-Xi Summit: Explained

HOST

From DailyListen, I'm Alex. Last time we covered how the war in Iran was rattling global markets, specifically the surge in oil prices as the conflict intensified. The key takeaway was that the U.S. naval blockade had effectively choked off the Strait of Hormuz, causing a 97 percent drop in traffic compared to pre-war levels. We also touched on the record-breaking volatility in oil futures.

HOST

Today, we’re looking at how that crisis is bleeding into the relationship between Washington and Beijing. President Trump is heading to a summit in China next week, but the atmosphere is tense. Specifically, there’s growing anxiety in Beijing about Iran’s behavior. We’re joined by Marcus, our economics analyst. Marcus, we know the Strait of Hormuz is a massive artery for energy. How is this hitting China’s bottom line?

MARCUS

We have seen this before when major powers rely on fragile supply chains during regional conflicts. The last time this happened, it created a ripple effect that hit export-driven economies hard. Right now, Beijing is caught in a difficult spot. They have long-standing ties to Tehran, yet they’re under immense pressure from Washington to help defuse the Hormuz situation. Chinese officials are worried that if this crisis drags on, it will severely damage their energy security and supply chains. Keep in mind, in 2024, about 7 percent of China’s total natural gas supply passed through that strait. It might sound like a small slice, but for an economy this size, any disruption to energy imports creates systemic, recurring impacts.

HOST

And that 7 percent figure is interesting because it’s not their only source. But clearly, any volatility there is painful. What are we seeing in terms of actual trade between China and Iran?

MARCUS

The numbers show a cooling trend. In February 2026, China exported $379 million to Iran. That is a 29.5 percent decrease from February 2025, when trade between the two totaled $537 million. It’s a significant drop. This suggests Beijing is trying to manage its exposure while navigating the diplomatic fallout. They have to balance their strategic partnership with Iran against the risk of angering Washington right before President Trump arrives for the summit on May 14th. You have to remember, President Trump has already warned China of "big problems" regarding their stance on Iran. Beijing is clearly trying to avoid an escalation that could turn a trade negotiation into a full-blown confrontation.

HOST

It feels like they're walking a tightrope. On one side, you have the U.S. trying to isolate both nations, which seems to be pushing them closer together. On the other, China’s economy is sensitive to any disruption in the region. Are there any clear signals on how China is handling this?

MARCUS

They are intensifying their diplomatic engagement, but it’s a delicate process. We don’t have specific details on the private agendas for the upcoming summit, or exactly what Iran might do next that’s causing this anxiety in Beijing. That is a major gap in the public record right now. We know China is concerned that Iran’s actions could provoke instability, which would complicate the trade talks with Trump. But we don’t have a clear picture of what those specific Iranian provocations look like. It’s a high-stakes guessing game. Beijing is effectively trying to de-escalate the situation behind the scenes to ensure the summit stays focused on trade rather than becoming a proxy battle over Iranian foreign policy.

HOST

It sounds like they are trying to keep the economic conversation separate from the geopolitical one, even though they’re clearly linked.

MARCUS

Exactly. It’s hard to separate them when energy security is on the line. Scholar Shen Dingli has pointed out that this conflict deeply undermines China’s energy security. And remember, unlike some other nations, Japan relied on the strait for about 93 percent of its crude oil imports in 2025. China has more domestic production—they produced about 60 percent of their natural gas domestically in 2024—but they still rely on sea-based LNG from places like Australia, Malaysia, and Russia. Any threat to that flow, or even just the fear of a threat, forces them to pay a premium. That uncertainty is exactly what Beijing wants to avoid as they prepare for Trump’s arrival.

HOST

So, looking ahead, we’ve got this summit on May 14th. What should we be watching for?

MARCUS

Watch for any official statements on the Iran situation coming out of the summit. If the two leaders announce a breakthrough on trade, it might signal that China successfully pressured Tehran to quiet things down. If the rhetoric stays focused on sanctions or "big problems," it could mean the diplomatic bridge is still broken. Either way, the cost of energy and the flow of goods through the Strait of Hormuz will remain the primary economic indicator of how this is all playing out.

HOST

I'm Alex. Thanks for listening to DailyListen.