Eurasia Press & News
The Houthi attacks on Red Sea commercial shipping are adversely affecting China’s economy, causing China’s leaders to question the benefits of relations with Iran.
The Red Sea crisis has demonstrated that militant factions in the Middle East can undermine Beijing’s interests just as they can challenge the United States and its allies.
The Houthi attacks provide an opportunity for China and the United States to cooperate, rather than battle, on a pressing global security problem.
China’s reported urgings that Iranian leaders halt the Houthis’ attacks test Tehran’s influence over the Yemeni group.
Leaders in Beijing might have thought that their ties to Iran immunized China’s global shipping conglomerates and its economy more generally from attacks by Yemen’s Houthi (Ansarallah) movement on global shipping through the Red Sea. The Houthis say they seek to compel global diplomats to halt Israel’s offensive against Hamas, which has had devastating humanitarian consequences for Palestinians in the Gaza Strip. Iran is the main source of arms for the Houthis, including the missiles and armed drones they have used to target Red Sea commercial ships on more than 30 occasions since mid-November. The Houthis maintain they are only targeting vessels with financial ties to Israel, but ships without evident links to Israeli interests have been struck as well. Apparently, in deference to Tehran’s global alignments, the Houthis have stated they would not target ships linked to Russia or China – both of which have sharply criticized U.S. backing for Israel’s offensive in Gaza.
Even though the Houthis have attacked no China-owned ships, leaders in Beijing have become increasingly concerned about the economic costs of the Iran-endorsed Houthi attack campaign. China’s companies depend on the free flow of goods between China and Europe. The Houthi attacks have caused the cost to ship a standard 40-foot container from China to northern Europe to jump from $1,500 to $4,000, according to the Kiel Institute for the World Economy in Germany. China’s trade with the United States is also being adversely affected. Due to temporary difficulties using the Panama Canal – the preferred U.S.-China shipping route – large vessels carrying energy products and goods to east Asia have sought to transit the Suez Canal. The Houthi violence is forcing these ships to divert around the Cape of Good Hope, adding 10 days and fuel costs to the journey and putting upward pressure on freight rates. China’s China Ocean Shipping Company (COSCO), the operator of the industry’s fourth-biggest fleet, abandoned the southern Red Sea because of the security risks. On the other hand, some lesser-known Chinese operators have taken advantage of the security threat to enter the Red Sea route market, winning new customers by claiming that China’s relations with Iran render them “immune” from Houthi attacks. Still, recognizing the threat to China’s economy, which has struggled to rebound from the COVID-19 pandemic, Chinese Foreign Ministry Spokesman Wang Wenbin said in late January Beijing was “deeply concerned over the recent rapid escalation of tensions in the Red Sea.” Echoing statements made by U.S. officials about the Houthi campaign, he added: “China calls for a stop of causing disturbance to civilian ships and urges relevant parties to avoid adding fuel to the fire in the Red Sea and jointly safeguard the safety of the Red Sea shipping route in accordance with the law.”
Sensing that China’s leaders realize that the region’s Iran-inspired violence now affects China’s interests as much as those of the United States, senior U.S. officials have sought to enlist China to help halt the Houthis’ strikes. U.S. leaders assess that, in addition to having an economic interest in stopping the Houthi campaign, Beijing might have diplomatic and economic leverage over Iran, the chief sponsor of the Houthis, that Washington lacks. China is now the Islamic Republic’s largest trading partner, accounting for some 25 percent of total Iranian trade. It is also Iran’s sole large oil customer, importing more than 1 million barrels a day of Iranian crude despite U.S. sanctions on companies that purchase Iranian oil. In 2021, the two countries signed a 25-year strategic agreement that envisions as much as $400 billion in Chinese investment in Iran, although experts are skeptical the investment will ever reach that scale. National Security Council Director of Strategic Communications John Kirby has explained: “China has influence over Tehran. … And they have the ability to have conversations … that we can’t.” He added U.S. officials have asked Beijing to use that influence to “help stem the flow of weapons and munitions to the Houthis.” National Security Adviser Jake Sullivan reinforced that request during his meeting last week with Foreign Minister Wang Yi in Thailand, which included discussions on a wide range of bilateral issues, including Taiwan.
There are signs Beijing might be cooperating with Washington to stop the Houthi assaults. A senior U.S. official, briefing journalists on the Sullivan-Wang meeting, stated: “Beijing says they are raising [the Houthi attacks] with the Iranians, and I think you’ve seen that reflected in some of the press reporting. But we’re certainly going to wait to see results before we comment further on how effective we think — or whether we think they’re actually raising it.” A January 26 Reuters report, quoting four Iranian sources, said that in the course of several recent bilateral meetings, Chinese officials had warned Iran that continued Houthi attacks would adversely affect the China-Iran economic relationship. Still, even if China has urged Tehran to stop the Houthi attacks, Iranian influence over the Houthis is uncertain, and the Houthis apparently have enough stockpiled missiles and armed drones (despite U.S.-led strikes thus far) to continue their campaign even if Iran does not resupply them.
Yet, there is widespread skepticism that China will do more than join U.S. officials’ calls for the Houthis to end their campaign. China has cultivated Iran as a partner in its efforts to challenge U.S. and European dominance of the global political and economic system, for example, by inviting Tehran to join the Shanghai Cooperation Organization (SCO) and an expanded BRICS coalition, in addition to brokering Tehran’s rapprochement with Saudi Arabia last March. It is doubtful that Beijing wants to risk an outright rupture with Tehran over the Red Sea issue, particularly insofar as the United States and its partners are already advancing Beijing’s objectives by countering the Houthis militarily. China’s lack of intervention in the Red Sea crisis also comports with Beijing’s overall regional approach, which is to expand its economic and diplomatic ties throughout the region without involving itself in the region’s politics or its violent conflicts. China has access to a naval base in nearby Djibouti and has deployed at least three surface combatants in the waters off Yemen, but Beijing appears primarily concerned with protecting, and according to some reports, escorting, Chinese commercial ships. China has given no indication it is willing to join the U.S.-led maritime security coalition mission, Operation Prosperity Guardian, set up in December to deter the Houthi attacks. Despite sailing in close proximity, Chinese warships did not assist the U.S. Navy in its response to a distress call from the commercial vessel Central Park last November. The U.S. Navy, joined by naval vessels from Japan, drove off and later arrested the Somali attackers, who reportedly had been hired by the Houthis to seize the ship.
Some foreign policy experts take the argument further – that Beijing is privately applauding the regional instability caused by Iran-backed regional actors, particularly the Houthis. The regional violence, some argue, is drawing the United States deeper into the region’s conflicts and diverting U.S. attention and military resources that might otherwise be devoted to turning back any Chinese military action against Taiwan. Yet, China’s statements and naval deployments suggest that Beijing’s concerns over the Houthi threat to its commercial interests are significant and determinative, even if China has decided it unwise for its diplomats and forces to confront the Houthis and their Iranian backers directly.
