39 and the Shanghai Cooperation Organization, helps Beijing position itself as a leader of the Global South and a challenger of American dominance. Altogether, Iran provides China with vital energy, infrastructure opportunities, and a geopolitical stance that, though largely rhetorical, supports its broader global ambitions. In line with its strategic interests, China has taken various steps to support Iran’s ayatollah regime amid sustained external pressure. However, true to Beijing’s broader regional approach of maximizing economic benefits while minimizing costs and risks, this support has remained carefully calibrated to advance China’s interests without provoking direct confrontation with Washington. During the Iran-Iraq War, for example, China supplied arms to Iran while simultaneously selling weapons to Iraq. It contributed to Iran’s nuclear development, but under US pressure canceled a technology transfer agreement in the late 1990s. As a permanent member of the UN Security Council, China has worked to soften international sanctions on Iran, but ultimately allowed them to pass. It has provided dual-use materials and technologies that supported Iran’s weapons industry, yet refrained from supplying complete weapons systems. Publicly, China opposed Iran’s pursuit of nuclear weapons, while backing its right to develop nuclear capabilities for peaceful purposes and offering diplomatic cover. Most notably in recent years, according to official US sources, China has purchased 80-90 percent of Iran’s oil exports and signed investment agreements that enabled Tehran to bypass US sanctions, providing the regime with a critical economic lifeline. However, these deals were struck at below-market prices, prompting resentment in Tehran over what it saw as China’s exploitation of Iran’s economic vulnerability for its own gain. TWO CRITICAL VULNERABILITIES IN BEIJING’S REGIONAL APPROACH Unfortunately for Beijing, Iran’s regional position has been in steady decline since the autumn of 2024. What began as a series of setbacks for its proxies and allies in the months leading up to the war with Israel was, within days of Israel’s military offensive in June 2025, revealed as a profound military inferiority that left Iran largely helpless against its arch-rival despite its having invested billions of dollars over three decades to counter it. Not only did China not stand by Iran at this critical moment, as some might have expected, but it even implicitly warned it not to use its ultimate weapon – the blocking of the Hormuz Strait – and toned down its anti-Israel rhetoric. But it was not only Iran’s defense posture that collapsed. A key pillar of China’s Middle East strategy, a regional power previously viewed as a counterweight to otherwise unchallenged US dominance, was revealed to be overstated. As discussed below, this does not mean China’s investment in Iran was squandered, nor that its broader position in theMiddle East has significantly eroded. It does, however, highlight two critical vulnerabilities in Beijing’s regional approach. First, it shows a persistent misunderstanding of the region. For years, China viewed Middle Eastern politics as irrational, radical, and ideologically volatile, contrasting with Beijing’s preference for technocratic stability. This lens led to repeated strategic miscalculations. The Arab Spring caught China by surprise, resulting in the loss of billions in investments. The 2020 Abraham Accords similarly defied China’s narrative of declining US influence and reliance on the unresolved Palestinian issue as a regional barrier. Most recently, Israel’s swift recovery and reassertion of strategic dominance since autumn 2024 likely challenged China’s expectations of a shifting balance in Iran’s favor following the October 7 attack. Collectively, these episodes reveal a deep gap in China’s grasp of regional dynamics, undermining its credibility and limiting its strategic effectiveness. The Israel-IranWar has exposed the limits of China’s ambitions in the Middle East, revealing that despite its rhetoric and economic presence, Beijing remains unwilling and unable to replace the United States as a true regional power Second, the true extent of China’s commitment to and influence over the region have been laid bare. In recent years, Beijing has portrayed itself as an ascendant power in the Middle East, pointing to the expansion of the Belt and Road Initiative (BRI), its growing trade with Gulf states, and high-profile diplomatic moves such as its 2023 mediation between Iran and Saudi Arabia as evidence of rising clout. These efforts were often framed in contrast to what Chinese
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