Premier Li Qiang’s keynote address at the China Development Forum. Photo: Courtesy Xinhua

China’s charm offensive amid the chaos in the Gulf

But Li’s message might end up falling on deaf ears despite the energy shocks rippling across the world

ByChina Factor Staff

Chaos from the Iran war has left China portraying an image of calm. Amid the conflict in the Gulf, Premier Li Qiang told global executives in Beijing that the world’s second-largest economy was now a “harbor of stability” compared to volatility in the United States.

He promised in his keynote address at the China Development Forum over the weekend that Beijing would pursue a more balanced trade policy. It came after the communist-ruled country reported a record US$1.2 trillion trade surplus last year.

With oil prices soaring after Iran blocked the Gulf’s critical maritime chokepoint of the Strait of Hormuz, the Middle East is facing an “existential” crisis. The region resembles a war zone, even as Tehran continues to ship oil to China, a crucial strategic partner.

“Li didn’t name America … but the message is clear that China is now safer, more reliable and stable, and more focused on economic development rather than conflicts,” George Chen, of the Asia Group consultancy, told the Financial Times at the Davos-style forum.

Trade tensions:

  • Before the US-Israel war against Iran’s repressive regime, the global economy was reeling from the turmoil of tariffs imposed by American President Donald Trump.
  • China was singled out for its heavily subsidized exports, flooding into the US and Europe. Talks between Trump and Chinese leader Xi Jinping have been delayed. 

Delve deeper: “[Still,] China will unswervingly promote high-level opening up, and import more high-quality foreign goods. [We will] work with all parties to promote balanced trade [by] expanding the global economic and trade pie,” Li said in his speech.

Between the lines: Alicia Garcia-Herrero, of the Brussels-based Bruegel think tank, was skeptical. “I don’t think the [European Union] is pivoting because the harm to the EU economy is huge from China’s exports,” she said as reported by EU Perspectives.

Big picture: The same applies to the US. Mired in a battle of wills, Trump called on Beijing last week to help secure the Strait of Hormuz. At least 45% of oil imports and 30% of China’s liquefied natural gas traverse the sea-bound artery.

Bottom line: But Xi has refused to get involved in the mayhem engulfing economic partners in the Gulf, including Oman and the United Arab Emirates, as well as Saudi Arabia and Qatar.

China Factor comment: Instead, Beijing has wasted no time in ramping up a charm offensive to counter the US military action, which threatens an oil shock not seen since the 1970s energy crisis.