March 18, 2026

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How the War in the Middle East Could Impact the U.S.-China Competition

(AP Photo/Alex Brandon, Pool)

On March 16, U.S. President Donald Trump said that Washington had requested a postponement of the meeting between Trump and Chinese leader Xi Jinping, scheduled for March 31 to April 2 in Beijing. Trump said, “We’ve got a war going on. I think it’s important that I be here.” The long-anticipated meeting later this month between Trump and Xi was seen as a key indicator of the durability of a potential trade détente between the world's two largest economies, following last year’s trade war. On Monday, top economic officials from the U.S. and the People's Republic of China (PRC) concluded preparatory talks in Paris. The read-out of the meetings, led by U.S. Treasury Secretary Scott Bessent and PRC Vice Premier He Lifeng, was largely positive. Bessent noted that the talks “were constructive and they show the stability in the relationship,” and the Chinese side said the talks were "in-depth, candid, and constructive consultations.”

The possible postponement of the Trump-Xi meeting is unlikely to signal a deterioration in U.S.-China relations. It may, however, signal that the Trump administration believes the war will continue for at least the next two weeks. Trump also likely believed he would arrive in Beijing with a more favorable outcome from Operation Epic Fury — and thus more leverage — than has materialized to date. Instead, as the regional war has intensified, with global economic and energy consequences, the conflict could shape the future of competition between the U.S. and China.

The PRC’s approach to the ongoing conflict can perhaps be most accurately described as driven by a complex matrix of self-interests rooted in pragmatism. Iran is a long-standing strategic partner for the PRC in the region, with cooperation spanning economy, energy, diplomacy, and security. At the same time, Beijing enjoys strong relations with the Arab states, rooted in trade, energy, and investments. And while Beijing would prefer the stability of continuing to deal with the current regime in Iran, it does not share deep ideological ties with the Islamic Republic. If the ultimate outcome of the war is a different regime in Tehran, it would be presumptuous to assume that China would not adopt a pragmatic approach toward the new leadership. Indeed, while the conflict has caused significant pain for the Chinese Communist Party (CCP) — especially amid rising oil prices, disruptions to global trade, and volatile markets — Beijing may stand to reap long-term benefits vis-à-vis the United States.

Amidst the conflict, carefully balancing its regional interests and nurturing an image of neutrality, China has focused on diplomacy. PRC foreign minister Wang Yi has held phone calls with regional and European counterparts, and Beijing dispatched a special envoy for the Middle East, Zhai Jun, for a diplomatic tour focused on mediation and de-escalation. Zhai’s first leg of shuttle diplomacy was focused on a regional tour of the Gulf, with Saudi Arabia being the first stop. In a meeting with the UAE foreign minister, Zhai expressed his appreciation for how the UAE had “responded calmly and responsibly with restraint.” The CCP likely believes that the Gulf countries' continued restraint and willingness to engage in dialogue will be key to brokering agreements to safeguard Beijing’s interests in the region.

The CCP is also likely to seize on the current conflict to position itself in bilateral and multilateral forums, as well as through state-backed narratives, as a responsible and stable alternative to the United States. Indeed, the PRC state media has, in the last decade, increasingly pushed several anti-U.S. narratives, including portraying U.S. military deployments overseas as a leading source of global instability. The current conflict in the Middle East will likely be framed by the CCP for years to come as an example to bolster its diplomatic and political influence in the region and beyond.

Trump’s comments and actions can aid Beijing’s narrative. Over the weekend, Trump called on several countries reliant on the Strait of Hormuz for energy shipment, including China, to send warships to help police the Strait: “China should help too because China gets 90% of its oil from the Straits,” (the actual percentage of Chinese oil imports via the Strait is closer to 40). The PRC has not publicly commented on the request, but nationalist and foreign policy commentators in China have mocked it, with one writing that the U.S. was “begging China to help clean up the mess.” It behooves Washington to reflect on what signal such comments, even made offhand, send to partners and allies in the region, suggesting that Beijing should be responsible for helping to secure the critical waterway.

Simultaneously, a prolonged war in the Middle East can offer the PRC localized advantages in East Asia. Iran’s counterattacks have produced a sustained demand for high-end interceptors and precision-guided munitions. Following reports that Iran had targeted and destroyed the radar system of the THAAD system in Jordan, the Washington Post reported that the U.S. was seeking to move parts of a THAAD system from South Korea to the Middle East theater. Reports also suggested that Washington and Seoul were in talks to redeploy Patriot air-defense batteries from South Korea to the Middle East. On March 10, South Korean President Lee Jae Myung stated to the Cabinet: “The USFK may dispatch some air defense systems abroad in accordance with its own military needs. While we have expressed opposition, the reality is that we cannot fully push through our position.” Additional reports over the past weekend detail that, at the request of U.S. Central Command, 2,500 Marines and the USS Tripoli have been dispatched from Japan to the Middle East.

Recent U.S. military action in Venezuela and against Iran has signaled to Washington’s adversaries, including Beijing, that the U.S. military remains tactically superior. This could, in turn, serve as a deterrent. The current conflict, however, also provides Beijing with opportunities to observe U.S. system performance and decision-making. This can be leveraged for future PRC-hostile actions, ranging from conventional military confrontation to gray-zone activities and the People’s Liberation Army’s integration of “intelligentized warfare.” Moreover, experts and practitioners have warned that overextending military resources on Iran could come at the expense of preparing for a potential future conflict with the PRC — one that would require the U.S. military at full strength across a vast region and multiple domains. The two-decade-long conflicts that entrenched the U.S. in the wars in Iraq and Afghanistan served as a distraction from the rising strategic threat that the PRC would come to pose. Today, the costs of distractions are even higher.

Now entering its third week, the conflict is a regional war with far-reaching consequences for the global economy and energy supply chains. With crude oil prices rising to over $100 a barrel, and shipping through the Strait of Hormuz effectively stalled, Beijing is not isolated from these negative consequences, and sustained disruption in the Strait could have lasting impacts on China’s economy and energy security. Beijing may, however, be better positioned than other Asian countries to weather the storm, at least in the short term. As of January 2026, reports suggest that China possessed crude reserves sufficient to meet demand for three to four months. According to Kpler, approximately 12 million barrels of crude have transited the Strait since the start of the war, and though its destinations are increasingly hard to determine, it's likely some are headed to China. Conversely, U.S. allies in the region are feeling the immediate pain of the war, as Japan imports around 95 percent and South Korea 70 percent of its oil from the Gulf. This has prompted fuel price caps in South Korea and plans to release strategic oil reserves in both countries.

During its annual “Two Sessions”, Premier Li Qiang announced the lowered economic growth target for 2026, at 4.5 to 5 percent – the slowest projected growth since 1991. Ultimately, a prolonged disruption to the Strait, which is sending shockwaves through the global economy, will also impact Beijing’s economic targets. If anything, the ongoing conflict in the Middle East is likely to reinforce Beijing’s conviction that it is on the right trajectory in diversifying its energy supply chains, including accelerating the expansion of renewables.

Beijing’s position on the ongoing war in the Middle East has remained focused on diplomacy and calls for de-escalation. This approach is driven by a complex matrix of interests rooted in pragmatism: continuing to reap the benefits of a strategic partnership with Iran, avoiding alienation of major economic partners in the Gulf, and positioning Beijing as a responsible and reliable alternative power. And while the conflict may cause disruptions that negatively affect the PRC as well, the CCP is likely to seek to observe and seize any opportunities to gain long-term strategic leverage vis-à-vis the United States—economically, diplomatically, and militarily. Trump may find that the cumulative costs of the conflict have eroded the leverage he expected to bring to a future meeting with Xi, leaving Beijing with more leverage and a stronger negotiating position than originally planned.