China’s Cautious Diplomacy: Prioritizing Domestic Interests Amidst Global Tensions

China’s growing diplomatic engagement with nations like Iran and Russia has fueled expectations of a more prominent global role. However, Beijing’s foreign policy remains firmly rooted in safeguarding its own domestic interests, particularly its vital global export markets. This pragmatic approach underpins China’s measured response to reports suggesting its involvement in brokering a temporary ceasefire between Iran and its adversaries. While The New York Times cited three Iranian officials pointing to China’s role, and AFP noted U.S. President Donald Trump’s acknowledgment, Beijing has refrained from confirming direct mediation.

Chinese Foreign Ministry Spokesperson Mao Ning acknowledged on Wednesday that China had made "active efforts" to end the conflict. She highlighted that Foreign Minister Wang Yi had engaged in 26 phone calls with representatives from countries including Russia, Saudi Arabia, Germany, and Iran since the U.S.-Israel strikes on Iran commenced on February 28. Despite these efforts, China stopped short of claiming direct mediation.

Following the U.S.-Israel strikes against Iran in late February, China had called for an "immediate stop" to military operations. When questioned on March 3 about Iran’s counterattacks, the Foreign Ministry urged "all parties" to prevent the conflict from spreading, without specifically mentioning Tehran.

Zongyuan Zoe Liu, a senior fellow for China studies at the Council on Foreign Relations, clarified Beijing’s actions, stating, "What Beijing did is not really about direct intermediation." She elaborated on CNBC’s "The China Connection," explaining, "What Beijing did is, more precisely, broker[ed], facilitated the ceasefire. From that perspective, there’s nothing [that has] changed with regards to Beijing’s foreign policy. It does not mean Beijing is becoming more active."

Liu emphasized that Beijing’s primary concern stems from the risk of a global economic downturn caused by the conflict, which would adversely impact its export-dependent economy. Last year, net exports contributed approximately one-third of China’s Gross Domestic Product (GDP), a figure that underscores the vulnerability of its economy to disruptions in global trade, even amidst elevated U.S. tariffs.

The International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned on Thursday that global growth would decelerate, even if the ceasefire holds, citing persistent uncertainty surrounding the Strait of Hormuz. This critical waterway is responsible for approximately one-fifth of global oil supply, connecting the Persian Gulf to international shipping routes. While China is the leading purchaser of Iranian oil and relies on this passage for nearly half of its seaborne oil imports, this constitutes only 6.6% of China’s total energy consumption.

Hai Zhao, a director of international political studies at the Chinese Academy of Social Sciences, a state-affiliated think tank, noted that China faces "immense pressure due to rapidly rising energy costs, and hopes the Strait of Hormuz will be reopened soon." As of January, China reportedly held crude oil stockpiles sufficient to meet demand for three to four months. Data indicates that Iran has been shipping oil through the Strait of Hormuz to China since the conflict began.

Despite these assurances, gasoline prices in China saw an 11% surge in March compared to the previous month. Chinese authorities have raised official domestic gasoline prices twice in six weeks, by a total of 1,580 yuan per metric ton, or approximately 60 cents per U.S. gallon. This contrasts with the average price increase of over $1 per gallon in the U.S. during the same period. The escalation in energy costs is also impacting factory profit margins, contributing to broader price pressures across China’s manufacturing sector.

Globally, Brent crude futures remained below $100 a barrel on Friday, despite limited indications of recovery in shipping through the Strait of Hormuz. Recent Iranian attacks on a crucial Saudi pipeline have also significantly reduced the kingdom’s oil output, according to Saudi Arabia’s state news agency.

The Backdrop of China’s Diplomatic Positioning

China’s current diplomatic stance builds upon its pivotal role in restoring diplomatic ties between Iran and Saudi Arabia three years ago, effectively ending three decades of animosity. This rapprochement was significant, especially considering U.S. interests in the Middle East, and it elevated China’s profile in the region.

Zhao posited that this history positions Beijing to act as a mediator when both parties are amenable to de-escalating conflict. However, he cautioned that China lacks the capacity or inclination to compel either side into negotiations. Instead, China’s support lends greater weight to Pakistan’s mediation efforts. Pakistan, sharing borders with both China and Iran, is slated to host Iranian and U.S. leaders in Islamabad this weekend for ceasefire talks. The extent of Beijing’s involvement in this summit remains undisclosed.

Chinese Foreign Ministry Spokesperson Mao Ning stated this week, "We support the mediation efforts by countries including Pakistan." She reiterated Beijing’s call for all parties to cease hostilities promptly for the sake of regional peace, adding, "China has made active effort to this end."

In late March, China and Pakistan jointly unveiled a plan for "restoring peace and stability" in the Middle East. This initiative includes provisions for a ceasefire, peace talks, and the resumption of normal maritime passage through the Strait of Hormuz. Pakistan abstained from voting on a UN Security Council resolution this week that aimed to encourage countries to coordinate their defensive efforts to reopen the strait. China and Russia, both veto-wielding members of the Security Council, objected and proposed an alternative resolution.

Sultan Ahmed Al Jaber, CEO of Abu Dhabi National Oil Co., stated on Thursday in a social media post that Iran has made it clear that ships require its permission to transit the strait. He asserted, "The Strait of Hormuz is not open. Access is being restricted, conditioned and controlled."

Before the current conflict, Iran had intermittently harassed, attacked, or seized vessels transiting the strait amidst escalating tensions with the U.S. CFR’s Liu observed, "China welcomes any chance to present itself as a constructive, responsible power while the Trump administration is seen as the source of the instability."

However, Liu cautioned that the broader geopolitical dynamics remain unchanged. "The underlying structural tension between Beijing’s dependence on a rules-based global order and Washington’s growing willingness to disrupt that order remains entirely unresolved," she concluded. "That is the story worth tracking beyond the immediate ceasefire."

CNBC’s Asriel Chua contributed to this report.