The Decibel - How the war in Iran exposes the limits of China’s influence

Episode Date: March 26, 2026

Since the U.S. and Israel first attacked Iran almost a month ago, the ripple effects of the war have been felt globally. The closure of the Strait of Hormuz has affected oil prices worldwide, but energy shocks are especially felt across the rest of Asia, which is heavily dependent on energy from the Gulf states. The 35 million migrant workers living in the Gulf – the bulk of whom come from South and Southeast Asia – are in a particularly precarious position. And China, a strategic partner of Iran, has found itself on the sidelines of this war. The Globe’s Asia correspondent James Griffiths explains the geopolitics at play and how the war is impacting the day-to-day lives of people across the continent. Questions? Comments? Ideas? Email us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The ripple effects of the war in Iran have been felt globally ever since the U.S. and Israel first attacked almost a month ago. The closure of the Strait of Hormuz, a key shipping route on Iran's south shore, has had a massive impact on global oil prices. This is especially felt across the rest of Asia, where much of their energy resources come from Gulf states. And for China, a strategic partner of Iran, they find themselves in a tricky space. bought geopolitically, with the war exposing the limits of China's influence in the region. Energy and geopolitics aside, people across the continent are dealing with the fallout of the war and its impacts on their day-to-day lives. So today, we're going to talk to James Griffiths. He's the Globe's Asia correspondent, based in Hong Kong. I'm Cheryl Sutherland, and this is

the Decibel from the Globe and Mail. Hi, James, great to have you back on the show. Thanks for having me. So, James, you're in Hong Kong and you travel around the region a lot. Can you give us a sense of how connected the rest of Asia is to the Gulf states and Iran? Asia as a region is one of the most dependent on fuel coming from the Gulf. We have some countries around this region source as much as 90% of their oil and gas from Gulf nations. And even countries like China are sourcing kind of 30% plus, 55% when we're talking about Japan and South Korea.

As well as that, there is also, you know, other economic ties. You know, obviously a lot of consumer goods are coming from Asia to the Gulf region. And there's a huge flow of people, you know, literally tens of millions of migrant workers from particularly countries like India, Bangladesh, Pakistan. They are, you know, travels to the Gulf to work in the construction industry, other industries, and a lot of, you know, resident in the Gulf at the moment. We're going to come back to other Asian countries in a little bit, James. But let's focus in on the geopolitical context with China here.

We know that China is one of Iran's allies, right? But what does that mean in practice? Like, what does their relationship look like? So if we were talking a couple of years ago, we'd be looking at China as a major new player in the Middle East. They have strong ties with Iran, long historical ties with Iran, but also really good ties with the other Gulf states, with places like Saudi Arabia, the UAE,

and also really good ties with Israel. And so, you know, as recently as 2023, China was emerging as a kind of power broker in the Middle East. They secured this historic normalization relations between Tehran and Riyadh in 2023. And they had really good ties over on. They didn't have that kind of historical baggage that a lot of Western countries have in the Middle East with colonialism.

And they didn't have a history of backing unpopular regimes like Russia with Syria. But what's happened in the years since, so since October 7th and the various wars that have broken out, is that China's influence and kind of position has actually been shown to be pretty limited. And this latest war is a really good example, that China is feeling the issue. impact of this war, Tehran is a close ally of China's, and they desperately don't want the straight to foremost to be closed. But Beijing's ability to shape the situation and influence any of the players in this has been very, very limited. And, you know, they've essentially been playing a

backseat role. Is it fair to say that China was hoping to have more of an important role in this region? Yeah, definitely. China was investing a huge amount of both money and political capital in the Middle East, building up ties with all the major players in the region and, you know, selling everything from kind of arms to consumer goods to countries across the Middle East. And, you know, there was a sense that, you know, it wasn't going to be the new U.S. It was not going to have military bases across the Middle East, but it could play a role similar to the one that Russia has played in the past where it counterbalances U.S. power in the Middle East, but that has not really panned out. And so as you mentioned, their importance in the region has shifted since the war began, or at least

like what they thought their importance was seems to have shifted. How has the relationship changed with China and Iran since the war began. What I think has been very difficult for Beijing in this is that while they don't want to see the end of the regime in Tehran, they also don't have that much they can do to shape this situation, right? But once the war began, they don't have that much influence over the US. They don't have that much influence over Israel, despite being pretty good friends with Israel.

So they weren't able to stop the war to begin with. And once it became clear that, the regime was, you know, teaching on the edge. We saw the killing of the Supreme Leader. China kind of started to step back and kind of, you know, play a relatively neutral role. We saw them, they have repeatedly criticized U.S. and Israeli strikes. But at the same time, they've also criticized Iran for striking other Gulf nations. And they've criticized Iran for, you know, thrusting to close the straightforward moves. So they're essentially saying, look, we don't want any of this mess, really.

And in terms of economic ties, can you kind of walk me through how China and Iran are connected economically. While China is one of Iran's most important economic partners and is the was prior to the war, the biggest buyer of Iranian oil, that doesn't really translate the opposite direction. So, you know, this partnership was incredibly important to Tehran. Iranian oil, it was incredibly heavily sanctioned prior to the war. And so there were pretty few buyers around the world. China was by far the largest. But at the same time, Iranian oil, when we're talking about the Chinese market, we're talking about the Chinese kind of energy sphere, it made up a relatively small segment of that and could easily be balanced off by the thing. So this is an

important economic relationship, but it's nowhere near from Beijing's perspective, it's nowhere near as important as its relations with Saudi Arabia with the UAE. Interesting. Yeah. And just to get some numbers in here, China buys more than 80% of Iran's shipped oil. So that's quite a bit. Yeah. I mean, China was hugely important to Iran. You know, this was the only real major customer that they had. And, you know, the same similarly with Venezuela, that China was the major buyer of heavily sanctioned crude around the world at, you know, huge discounts. But that doesn't necessarily mean that the relationship was that important to Beijing. Let's turn to the U.S. now and the relationship between China and the U.S. Where do things stand between the two countries since the war began?

Relations between the U.S. and China are in a slightly confusing states at the moment. They were, did seem to be improving as we answered the start of this year. US President Donald Trump and Chinese leader Xi Jinping met in South Korea late last year. They were moving towards some kind of comprehensive trade deal to end the tariff war between the two countries. And Trump was due to visit China, well, essentially this week towards the end of March. But since the war started, that has kind of been disrupted, even though both sides are still trying to say that they're playing nice and they want to continue this improvement of relations. And that's happened for a couple of reasons. Both because, as I said, China is a strong critic of this war.

You know, they can't really shape the situation on the ground, but they definitely don't want it to be happening and they have criticized it vociferously. And then at the same time, you know, in the last week or so, we had Mr. Trump delaying his planned visit to China, which is really concerning for Beijing because the longer I think we go without that in-person meeting without that visit, the risk of disruption to this relationship grows. You know, Trump has proven himself incredibly unpredictable. and volatile. And so the risk that you have some kind of inciting incident that then unravels all of the

work that's been done over the last six months or so is pretty high. We've already seen Trump express anger that Beijing, like most countries, has refused to send naval forces to the straightforward moves. And the concern in Beijing, I think, will be that as this goes on without a visit or as the war continues to breed chaos in the Middle East and around the world, the chance of some kind of flashpoint derailing U.S.-China relations that they've worked so hard to build up again might unravel everything. Something I read in one of your pieces, James, was this Chinese state-run tabloid quote from the Global Times. It said, quote, Washington is asking who will send warships? Beijing is asking how to stop the war. The contrast and approach is sharp. I just thought that was a really interesting quote.

What did you make of that? Yeah, I think this is pretty reflective of Beijing's position on the war. And on a number of US interventions, going back to at least the 2003 invasion of Iraq, Beijing gets a lot of stick from Washington, you know, for supposedly exerting its power across Asia and projecting power around the world. But it's never done this kind of invasion. It's never destabilized a whole region. And it presents itself in international affairs as a peacemaker, as, you know, wanting stability and promoting stability. And so this latest war and latest U.S.-led intervention in the Middle East, only kind of reinforces that position that Beijing has. And when we're talking about how the global South looks at these two powers, China looks like the one that is promoting peace, promoting trade, promoting stability. And the U.S. increasingly looks like the one that is promoting chaos. We'll be right back. James, let's talk about energy here. In China, how deeply are they feeling

energy shocks caused by the closure of the Strait of Hormuz? So China isn't completely cut off from this. these shocks, there have been some fuel price increases. The government has intervened to stop those going out of control. There have been suggestions of limits. There's been some limits to exports, specifically fuel exports from China, because China is also an oil producer. But compared to the rest of Asia and compared to other countries around the world, China is pretty resilient to this latest shock, both because, especially since the war in Ukraine, China has worked to diversify its energy sources so that it isn't at risk of, you know, one supplier being cut off.

either by sanctions or by some kind of international incident like this. So, yes, Saudi Arabian or Iranian Gulf oil and gas is important to China, but it's not the only source and they can balance it off with other sources, particularly Russian crude, which they've been able to get, you know, they haven't sanctioned Russia, so they've been able to get that the whole time. At the same time, China also has some of the largest reserves of any country in Asia, both in terms of oil and gas. So they're better prepared for this kind of shock than most of the country.

So, you know, it's not ideal for the Chinese economy. It's not ideal for Chinese consumers, but it's not affecting China as much as a lot of other countries. This might be looking way down the line, but is there a potential that China could return to using coal? We have seen an increasing coal in some countries around Asia, not so much in China. China has, one of the things that I think this is, you know, underlining the value of doing and the good decision-making by China's leaders is, you know, the massive electrification and diversification of energy sources in China.

China is very advanced when it comes to renewables. You know, obviously people know that China sells solar panels and other renewable technology around the world, and that plays a huge factor in China itself. So, you know, we are seeing the suggestion of some countries around Asia pivoting to coal, but less so in China than in places like Pakistan or Thailand. Okay, let's talk about other Asian countries.

How dependent are they on energy from the Gulf? So again, you know, it varies, but we have some countries where it's up to 90% of their oil and gas comes from the Gulf. So incredibly dependent. As a region, it's around 60% of all oil and gas that's used or sourced in Asia comes from the Gulf region. So this is where the bulk of the Gulf's oil and gas is going or, well, let's say, was going prior to the war and Iran. How are they coping? Yeah, so like I said, it varies across the region. So China say, like I said, that China has diversified its energy.

demands and to make sure it's not overly reliant on any given provider. So China is only sourcing around 35% of its energy from the Gulf, which is still going to be a big hit, but they're able to lean on other suppliers. But then if you look right up the top of the list of importers, you have a country like Pakistan, which sources 81% of its oil and gas from the region. So this has been a huge disruption for places like Pakistan. And then even countries like Japan, South Korea, both import more than 50% of their energy from the Gulf. Asian countries are incredibly dependent on Gulf energy. What does that mean for people's day-to-day lives? I'm assuming that for people in these countries, things have probably changed significantly because of what's going on.

Yeah, absolutely. And especially in developing countries across Asia, these shortages and price increases already being felt really acutely. In Nepal and Lao, they're already major shortages of cooking gas and cooking fuel. We're seeing huge queues at gas stations. Even India, which is a huge economy, is having to ration fuel in a lots of parts of the country. Just this week on Tuesday, the Philippines declared a national emergency

due to fuel shortages. They switched a lot of their kind of government offices and public services to a four-day week. And their warning that they only have kind of just over a month left of reserves and it could get even worse. What about the impact on manufacturing? You know, Western countries rely heavily on East Asian manufacturing. What kind of impact could we see if this conflict continues? I think that's an important

point and it gets to how globalized and interconnected the economy is that, you know, if there are fuel shortages or slowdowns or, you know, four-day week, things like that in Asian countries, that is then going to be felt in the rest of the world because, like you said, these are key manufacturing bases. And that's not just maybe kind of poorer countries that are doing kind of, you know, traditional factory garments and things like that. But even towards on the higher scale and even towards there could be some shock on the kind of advanced tech AI economy because you have a place like Taiwan, which manufactures the bulk of the world's advanced computer chips. You know, they don't have a huge amount of reserves when it comes to oil. And they have particularly low reserves of LNG. And, you know, as they start to run out, run out or as those prices increase,

that is going to have a knock-on effect on chip manufacturing, that is going to have a knock-on effect on this already incredibly inflated expensive market for chips around the world, and that is going to be felt in the global economy. So, James, we've talked about the geopolitical impacts, and we've also talked about energy. I want to ask you about some of the human impacts here. You mentioned earlier that part of this relationship between the Gulf states and the rest of Asia includes migrant workers. How reliant are the Gulf states on labor from South and Southeast Asia?

They're incredibly reliant. Most of these countries essentially would not exist without this migrant labor. When we think about places like Dubai or Doha, these cities, these massive skyscrapers across these places, these were built by migrant labor, mostly migrant labor from South Asia. The day-to-day running the economy is hugely dependent on migrant workers from South and Southeast. Asia. It's more than half of the population in that region are migrant laborers, and the bulk of those migrant laborers are from South and Southeast Asia. How have those migrant workers been affected by the war? They've been affected in a number of ways. Obviously, it's an incredibly concerning

time for people in the Gulf, whether you're a resident or a migrant laborer, you know, that they have been living in essentially a war zone for the last couple of weeks. So there are concerns around that. Migrant laborers, you know, as kind of the poorest people in a lot of these societies, you know, are feeling this more acutely in that we've seen, you know, slowdowns in things like the construction sector, obviously, in some of these affected economies, businesses like hotels, even, you know, some airport shutdowns, you know, that is having a knock on effect on whether people have jobs to do, whether people are, you know, being able to take up employment that they've travel to the region to get. And often these people, these migrants, you know, they don't really

have a safety net. They don't, you know, they may have gone into debt to move to the region in the first place, they often have families back home who are dependent on them sending money from the region. So any kind of slow down, any reduced work, it's felt really acutely by them. And I can imagine that, you know, trying to leave the region for a lot of these workers is probably impossible. I mean, for price reasons and for other reasons, perhaps. Yeah, flights from the Middle East are, you know, A, incredibly limited because we've seen these shutdowns of some of the key airports and be very, very expensive. Some governments, particularly the Philippines have done repatriation flights at their own expense, but most countries,

you know, poorer developing countries that send a lot of migrant labor to the Middle East, they are not able to do that. And so their nationals are mainly stuck in place. What kind of impact does this have on their home countries? It could have quite a pronounced impact. We're not seen it immediately, but this is something that there is a great concern with the kind of weeks and months to come, because these migrant laborers are incredibly important to a lot of economies because they send back literally billions of dollars a year in remittances. There's nine million Indians in the region and they alone send 50 billion US dollars a year back to India in remissances. And India is a massive economy and that's still a decent

chunk of their GDP, but it's a massive economy they can absorb that, though obviously a lot of these families will be struggling without that money. When we talk about smaller economies in Asia, places like Nepal, Pakistan, Bangladesh, that is an incredibly important. wasn't part of their kind of national economy, their national GDP. And it's felt in more than one way, not just a lack of that money itself, which could be a devastating hit for families and kind of for the wider economy if there is any cutoff in remittances as a result of people working less or people losing their jobs. But that's also a vital source of foreign currency, especially US dollars, to these economies.

So just as these economies are facing increased prices of oil and other good, other commodities, as a result of the war, they have less foreign currency to then buy that stuff with, which means, you know, has a knock-on effect on how they're able to purchase it. So this could have a really disruptive effect on a lot of economies in Asia in the kind of next six months. So, James, just to end on the big picture here, the U.S. and Israel started this war, and now the people in these countries are dealing with the fallout, right? What do you think happens to the relationship or even the perception of the U.S.

in this part of the world? I think this will definitely damage perceptions of the US. It will particularly further damage perceptions of Israel in this region. It's difficult to say because, you know, we don't have solid polling. What we can talk about is, you know, we can go by media coverage. You know, this is not a war that has widespread or even, you know, moderate support in Asia. And there is a lot of criticism of the U.S. and Israeli decision to start this war. And there is a sense that Asia is bearing the brunt of the effects.

What's been, you know, strange or harder to gauge is kind of government official response. Because, again, you have a White House, you have an administration in Washington that is so unpredictable and volatile and often retaliatory that you don't maybe see the kind of criticisms that you would expect from places that are feeling this. So, you know, we're not getting countries apart from, you know, China and a couple of other places. you're not getting countries that are openly criticizing the war and definitely aren't openly criticizing President Trump. And I think a good example of this is, you know, we had the Japanese Prime Minister Sani Takaichi was in the White House this past week. She was in Washington. And, you know, Japan is feeling this. Japan, you know, like I said, they source a lot of oil and gas from the Gulf. They are definitely feeling the effects of this war. They definitely didn't want to see this war. But instead, you know,

you kind of expect her to be there to pressure Trump to kind of reach some kind of resolution. But instead, she's actually just left defending herself and defending Tokyo's decision not to send the Japanese self-defense forces to help with opening the strait of Hormuz. And she's kind of on the back foot. And, you know, that is definitely not limited to Asia. We've seen this with the European leaders as well, right? But they're kind of left in a position where they should, in theory, be criticizing the U.S., but actually end up defending themselves because the U.S. is making demands of them over the war.

And so it's all a bit confused. And I think a lot of countries that, you know, with a different U.S. administration would be more forceful in their criticism and their, you know, urging for peace and some kind of resolution to this are being very cautious in how they approach it. Confuse is a really important word in that, for sure. James, I really appreciate you making the time. Thanks so much for being on the show. Thanks for having me. That was James Griffiths, the Globe's Asia correspondent. That's it for today.

I'm Cheryl Sutherland. Our intern and associate producer is Finn Dermot. Our producers are Madeline White, Rachel Levy McLaughlin and Mahal Stein. Our editor is David Crosby. Adrian Chung is our senior producer, and Angela Pichenza is our executive editor. Thanks so much for listening.