Is China's economy insulated from Iran war shock?

The US and Israel’s war with Iran has sent shockwaves across the global economy, and created the largest energy crisis in decades. But China, the world’s second-largest economy, has by many measures appeared insulated from the worst of the fallout. Watch more World's worst energy crisis? Iran war sparks scramble for alternatives to Gulf oil Leah Fahy, senior economist in the China team at Capital Economics, says China's diverse energy mix has cushioned some of the effects of the global energy shock. "Even for China, a big spike in energy and oil prices is a bad thing, and it's going to have some negative impact domestically (...) China's economy is much less dependent on oil and natural gas. About 60 percent of its energy comes from coal, and it's got a big and quickly growing renewable energy infrastructure as well. So when you place China in the context of other countries, it's seeing a much smaller shock to energy prices than everywhere else in the world." She says the crisis has highlighted Beijing's dominance in clean energy technology. "I think the big picture, both within China and globally, we're going to see a surge in demand for these new green technologies, and China kind of dominates production of these goods. So it could be a pretty significant upside to China's exports . We've estimated that just with a pickup in global demand for electric vehicles alone, autos could add about 1 percentage point to China's export growth this year." Fahy says that beyond the economic impact, the Trump administration's shifting approach to foreign and trade policy has opened a door to China. "You're seeing increasingly Xi Jinping and the Chinese leadership more broadly trying to place China in this elevated global role, both as a sort of global arbiter, negotiator and also in some instances, the defender of global free trade, which is not the position you would have expected China to be putting itself in a few years ago."

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Is China's economy insulated from Iran war shock? is an episode from People & Profit by France Médias Monde.

This episode is 00:11:45 long.

This episode was published on Apr 23, 2026.

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