The “Greater-than-Expected” Impact of the Iran War on China’s Economy | by Peng Shaozong

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Discussions of the geopolitical opportunities the US-Israeli war with Iran may afford China are captivating, not least because they flatter a certain liberal consensus that Trump’s war is a grave strategic error.But it would be a mistake to read the war with Iran as a straightforward boon for China. The piece below by Peng Shaozong instead lays out a wide range of risks for China in stark detail, arguing that “the commodity price volatility triggered by the escalation of the current US-Iran conflict has had a systemic [系统性] and greater-than-expected [超预期] impact on China’s economy, with [the potential to generate] repeated disruptions [反复性特征].”The discussion we’ve observed so far has been mixed, reflecting the reality that the war presents China with an ambivalent set of risks and opportunities.On the “opportunity” side of the ledger are the obvious benefits of a strategic rival being weighed down in a potential quagmire. A number of authors echo the widespread observation that this is America’s “Suez Canal Moment”, that the war might undermine the petrodollar, and that it will lay bare the fragility of the US alliance system. Beyond that are arguments that the war is not merely a setback for the US, but an active opportunity for China—most prominently, the claim that high oil prices act as a de facto carbon tax, benefiting China as the centre of the global green economy.In a recent Sinification translation of a censored memo by the Chinese think tank Intellisia, the authors argued that a protracted Middle East conflict would not only drain US resources, but also reroute ca…