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Overview: Red Sea Crisis: China's Strategic Calculus and Regional Dilemmas; Annuthra K

Image Courtesy: Al Monitor

Article: 05/2024


The recent surge in Houthi attacks targeting maritime traffic in the Red Sea has sparked a significant global crisis, resulting in a notable rise in shipping expenses. Nearly 90 percent of container ships are now choosing longer routes around Africa instead of risking passage through the Suez Canal. China, being the world's largest exporter and heavily reliant on oil imports, has a keen interest in maintaining stability in Red Sea shipping lanes. A considerable portion of China's trade with the EU traverses the Suez Canal, and the country has invested substantially in ports along the Red Sea, notably in Egypt and Saudi Arabia.

The Red Sea and the Suez Canal serve as crucial lifelines for global trade, facilitating the transit of approximately 8 percent of the world's crude oil. Throughout January to November 2023, an estimated 8.2 million barrels per day of crude oil and oil products journeyed through the Red Sea, underlining its significance in the global energy landscape. However, amidst the backdrop of escalating tensions triggered by the Israel-Hamas conflict, the region has witnessed a series of unsettling attacks on commercial vessels. These incidents have sent shockwaves through the maritime sector, igniting fears of potential disruptions to the global supply chain. The hijacking of the Israeli cargo vessel, Galaxy Leader, on November 21 by Yemen's Iran-aligned Houthi rebels, with 25 crew members onboard, underscores the gravity of the situation. Given that approximately 12 percent of global shipping traffic traverses the Red Sea and the Suez Canal, the implications of these security challenges extend far beyond regional boundaries, warranting a closer examination of their impact on international commerce and maritime security.  

Satellite image: NASA, Terra/MODIS

Aspects regarding Trade and Economy:

China initially approached the Houthis' actions in the Red Sea with caution, refraining from condemnation or involvement in the U.S.-led Operation Prosperity Guardian. The fear of being seen as aligning with the West and implicitly supporting Israel in the Gaza conflict deterred China from joining the coalition. Despite attacks targeting various ships, including those unrelated to Israel, China believes its trade won't be severely impacted as the Houthis avoid targeting Chinese vessels. Economic calculations show increased shipping costs and insurance premiums, but they remain manageable. Additionally, China's exports have been sluggish due to weak global demand. Israel's losses from reduced port traffic are minimal, allowing China to criticise the coalition as primarily serving US interests. Without UN mandate and limited Arab state participation, China sees no value in its navy joining the operation against the Houthis.

China's cautious approach to the Red Sea crisis reflects its limited options and strategic considerations. While Chinese leaders may issue stern warnings to Iran, they are reluctant to intervene forcefully, fearing potential repercussions such as damage to Chinese vessels.

China's economic engagement with Iran remains fragile, with limited growth in investments compared to other regional players like Saudi Arabia and the UAE. This tenuous economic relationship undermines China's leverage over Iranian decision-making and fuels frustration among Iranian officials, particularly regarding Beijing's perceived reluctance to provide more significant support. The resulting political discord within Tehran's ruling elite further complicates China's ability to influence Iran's policies. 

Despite Beijing's commitment to easing tensions and actively engaging with all involved parties, the ongoing crisis poses both challenges and opportunities for China. On one hand, it has bolstered China's reputation as a significant external player, drawing attention from influential actors such as the U.S. and others in the Middle East seeking Chinese involvement. Conversely, the crisis also diverts Washington's attention away from its primary focus on the Indo-Pacific region. 

While outwardly maintaining a neutral stance, China finds itself in a delicate position: it seeks to expand its influence in the region while also facing economic threats posed by Iran's actions. Despite historically close ties between China and Iran, recent events have strained their relationship. China's response to Iran's involvement in the conflict has been notably muted, reflecting Xi Jinping's strategy of strategic ambiguity to balance collaboration with Tehran against long-term economic and security goals.

The absence of Houthi attacks on Chinese shipping in the region suggests a strategic immunity that has been cultivated over recent years, possibly leveraging security assurances from third-party actors. This immunity appears to allow Chinese vessels to navigate the area with reduced risk, leading to lower insurance costs and creating a market distortion that disadvantages other players.

The People’s Liberation Army's affirmation of standard naval operations in the Red Sea and Gulf of Aden, as reported by Chinese media, underscores China's non-involvement narrative, which is strategically employed to maintain this perceived immunity. By distancing itself from regional conflicts, China aims to deflect blame for any disruptions onto Western powers, particularly the United States, especially following their military actions in Yemen against Houthi targets.

Furthermore, China's messaging seems designed to drive a wedge between the United States and Europe, despite their joint efforts in Operation Prosperity Guardian. This attempt to sow discord could potentially undermine Western unity in addressing regional challenges, while positioning China as a more neutral or even benevolent actor in the eyes of regional stakeholders.

Chinese vessels - Unbothered: 

The recent use of signals indicating affiliation with China by at least five vessels traversing the Red Sea underscores the escalating measures taken to mitigate the risk of attacks by Houthi militants against China. By broadcasting messages such as "all Chinese crew" in fields traditionally reserved for destination information, these ships are employing unconventional tactics to deter potential threats. The strategic deployment of these signals reflects the heightened awareness among maritime operators of the security challenges posed by the ongoing conflict in the Red Sea. By associating themselves with China, these vessels may be leveraging the perceived immunity enjoyed by Chinese shipping from Houthi attacks, as observed in previous incidents (Attacks against the US, UK vessels).  

The distribution of these ships across the Red Sea and Gulf of Aden culminates the widespread impact of security concerns on maritime navigation in the area. Furthermore, the fact that some of these vessels are en route to Asia underscores the global implications of regional instability, as shipping routes crucial to international trade are affected (GCaptain., 2024). 

China’s Interest and Strategic Concerns: 

  • China's primary concern in the region appears to be maintaining stability to ensure the uninterrupted flow of its container shipments through the Red Sea and Suez Canal. Any disruption to these routes could have significant economic ramifications, particularly amid slower growth in China. Thus, allowing US and European forces to deter conflicts in the region aligns with China's economic interests. 

  • The observed immunity of Chinese shipping from Houthi attacks, possibly due to third-party security guarantees, reduces the costs of insurance for Chinese vessels. This immunity creates an unfair advantage for Chinese companies in the market, distorting competition and potentially impacting other players in the shipping industry.

  • China's rhetoric of non-involvement in the region while simultaneously preparing to lay blame on Western powers, particularly the US, serves to portray itself as a responsible global actor while undermining Western influence in the Middle East. Attempts to drive a wedge between Europe and the US, despite their coordination in certain operations, could potentially weaken Western unity and create opportunities for China to advance its own interests.

China's actions in the Red Sea have broader implications for maritime security in the Indo-Pacific region. The obstruction of major trade routes stresses the importance of alternative routes, such as those through the Indian Ocean. The redirection of shipping through the Mozambique Channel underscores the need for coordination in securing these secondary routes against emerging threats, including power competition, illegal trafficking, and jihadi movements. 

Challenges for China: 

  • According to experts, while there was significant momentum suggesting China's emergence as a major diplomatic and security actor, recent events, particularly the Israel-Hamas conflict, have underscored that China's regional approach remains primarily driven by economic interests. Analysts emphasise that China may lack the willingness or capacity to play a significant role in other areas of regional conflict at this time.

  • China's status as Iran's largest trading partner, responsible for purchasing 90% of Iran's oil exports over the past decade, raises questions about Beijing's potential influence in the region. 

  • Despite China's economic ties with Iran, its level of investment in the country remains relatively low. Analysts suggest that while China could potentially cancel deals or reduce oil imports to pressure Iran, such actions are unlikely unless Chinese interests are directly targeted or if the conflict escalates further.

  • While the GSI initially received positive reception from regional governments seeking economic development and increased foreign investment, the recent resurgence of conflict in the region, exemplified by Hamas' attack on Israel, has cast doubt on the initiative's efficacy in promoting stability.


Beyond geopolitical factors, practical considerations also shape China's decision to refrain from military engagement in the Red Sea. Despite having a military presence in Djibouti, China may lack sufficient military capabilities to make a meaningful contribution to the coalition. Additionally, the severity of the situation in the Red Sea may not yet warrant direct intervention by China, as shipping costs have not reached pandemic-era levels. Moreover, China's ability to influence Iran remains uncertain. Despite attempts to strengthen economic and political ties, recent events have underscored the challenges in exerting leverage over Tehran. Reports of Chinese efforts to persuade Iran to rein in the Houthis were met with denial, indicating a communication gap between China and the group. Additionally, Iran's economic reliance on China may not be significant enough for Beijing to sway Tehran's decisions. Trade and investment levels between the two countries have fallen short of expectations, complicating China's ability to influence Iranian policies.

As the crisis unfolds, it's unlikely that China will decisively condemn Iran or become a significant obstacle to resolving the conflict. Instead, China prioritises political neutrality over potential economic costs, expecting the West to address the crisis. However, the US could raise the cost of China's silence by exacerbating the crisis, though this approach carries significant risks. Alternatively, inviting China to participate in anti-Houthi operations could demonstrate its commitment to international cooperation while potentially straining its relationship with Iran. China's evolving stance on the conflict underscores its strategic inexperience in the region and the complex balance between economic and geopolitical interests it faces.


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  2. Handley, Lucy. “Demand for Shipments from China via Rail through Russia Has ‘Skyrocketed’ since the Red Sea Attacks.” CNBC, 1 Feb. 2024, Accessed 15 Feb. 2024.

  3. Levine, Nathan. “China Is Winning the Battle for the Red Sea.” UnHerd, 11 Feb. 2024, Accessed 15 Feb. 2024.

  4. “Russia and China Clash with US and UK over Attacks on Yemen Rebels for Strikes on Red Sea Ships.” AP News, 15 Feb. 2024, Accessed 15 Feb. 2024.

  5. “What Are the Impacts of the Red Sea Shipping Crisis? | Hellenic Shipping News Worldwide.”, Accessed 15 Feb. 2024.

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