Beyond shipping costs, the transport of energy commodities has been affected. Major liquefied natural gas exporter QatarEnergy had to pause its LNG shipments via the Red Sea briefly last month and ship movements in the area remain fraught and disrupted. Additionally, shipping through the alternative route of the Panama Canal has been restricted, as a
severe drought lowered water levels, forcing major shipping companies to scramble for other strategies. Consumer goods may continue to encounter notable disruptions even during the slow shipping season.
Chinese ships may be navigating the Red Sea without being attacked but China still has to contend with elevated energy prices,
increased shipping and insurance costs, and extended shipping times to Europe. Reductions in passages through the Suez Canal could result in more price divergences and heightened volatility in commodities, including oil.
Beyond economic costs, however, China also has to consider the Red Sea situation against its broader role in global affairs.
China has long been critical of the Houthis. In 2015, during the
Yemen civil war, after Houthis captured the capital Sanaa, China supported the UN Security Council resolution demanding that “the Houthis immediately and unconditionally” withdraw. In 2022, China supported a resolution condemning the Iranian-backed Houthis in Yemen. Yet China has a warming relationship with Iran and in 2021, both countries agreed to a
Comprehensive Strategic Partnership. Reports suggest Chinese officials have urged their Iranian counterparts to rein in the Houthis and their Red Sea attacks.
Despite maintaining a naval base in nearby Djibouti, China has so far
declined to join the US-led mission to safely escort ships in the Red Sea. There are signs, however, that Beijing is no longer entirely passive, having reportedly started to deploy naval vessels to escort Chinese cargo ships in the Red Sea.
Pressure is growing for China to pursue more decisive action. When Chinese Foreign Minister Wang Yi and US National Security Adviser Jake Sullivan met in Bangkok recently, the Houthi attacks were expected to be discussed, despite
no official mention. There was hope that Beijing would present concrete proposals or strategies to contribute to the collective effort of safeguarding the Red Sea.
Analysts have pointed to the delicate situation: it is too crucial to overlook but too sensitive to explicitly mention. Taking decisive action in response presents challenges for China, particularly when it comes to pressuring Iran.
Since 2021, China has reportedly invested US$185 million in Iran while also agreeing to multibillion-dollar investment and construction contracts with Saudi Arabia – which only recently
normalised relations with Iran – the United Arab Emirates, Kuwait, Qatar and Oman. This has deepened frustrations in Iran with China’s reluctance to do more to alleviate its economic pressures.
Importantly, China sees the Red Sea tensions as a spillover from the Gaza conflict. Its concern is with protecting its interests against a broader regional conflict strategy. And there are concerns in the region that additional measures taken by China, such as deploying its warships, might be seen as a threat to regional security.
The Red Sea region is significant to the strategic interests of both the US and China; they want to see stable trade, energy and resource flows, counterterrorism efforts and the promotion of good governance and stability. But US-China tensions in recent years have reduced the opportunities for both countries to cooperate in the Red Sea.
This crisis is an opportunity for a breakthrough. Despite US military action, commercial shipping in the Red Sea remains under pressure. China should consider contributing more proactively, drawing on its experience in escorting commercial vessels during previous escalations in piracy in the Gulf of Aden and the Red Sea.
The potential for US-China coordination arises not out of affection but the critical importance of issues such as supply chains and energy supply to both Beijing and Washington. Negotiations would be crucial to establish frameworks and mechanisms, and to plan for how the respective US and Chinese militaries should respond when they come into contact in the local area.
This commentary was originally released by South China Morning Post on February 13, 2024
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