China Weathers Energy Shock from Strait of Hormuz Closure
China has emerged as the sole winner in Asia from the crisis triggered by the closure of the Strait of Hormuz, according to a report published on Tuesday by the geopolitical consulting firm The Asia Group. The report concludes that China not only withstood the global commodities crisis resulting from the waterway's closure but also stands to gain from the economic and geopolitical trends sparked by the wider conflict.
Iran virtually closed the strait after the US and Israel launched joint strikes on 28 February, targeting government and military sites and killing Iran's supreme leader, Ali Khamenei. The ensuing crisis has sent global energy prices soaring, with Asia particularly exposed. Before the closure, roughly 80% of the oil and nearly 90% of the liquefied natural gas transiting the waterway was destined for Asian markets, along with a significant share of other critical commodities.
Asia's Largest Economies Compared
The report examined Asia's largest economies – China, India, Japan and South Korea – as well as emerging markets across Southeast Asia. Researchers mapped the economic and political repercussions of the crisis and its impacts across key sectors including manufacturing, energy and agriculture. They concluded that China was a clear winner from the crisis caused by Donald Trump's foray into the Middle East.
China's large stockpiles of oil and its ambitious rollout of renewable energy have made it less exposed to the energy shock than other countries. China has long maintained strategic reserves of energy, and last year took advantage of cheap prices to build up even bigger stockpiles. Its crude imports grew from 11.1 million barrels a day to 11.6 million in 2025, with over 80% of that increase being sent to stockpiles, according to analysis by Erica Downs, a senior research scholar at the Centre on Global Energy Policy. As of January, China had enough stockpiled to cover 104 days of imports at the 2025 level.
Renewable Energy Infrastructure Boom
The country has also been building massive amounts of renewable energy infrastructure in recent years. Last year it installed 315 GW of new solar capacity, more than half of the world's new solar. The year before, it added 277 GW. Beijing is aiming for half of China's energy to come from non-fossil sources by 2030, with the share from wind and solar reaching 30%, up from 22% in 2025. Although China's energy mix is still largely based on coal, which accounts for more than 50%, renewables' share is increasing rapidly.
The Asia Group's report stated: "With 1.4 terawatts of operating renewable capacity already online and a reported 90-110 days of crude import cover in reserve, China weathered the initial shock better than any regional peer."
Global Clean Energy Push Benefits China
China has also benefited from other countries reacting to the crisis by accelerating their clean energy buildout. Beijing dominates the global supply chain in solar and other clean technology industries and in recent years has been pushing much of this production overseas at low prices, to the chagrin of western leaders worried about their own industries. China's electric vehicle exports soared by more than 110% in May compared with the previous year, while solar shipments in April increased by 60%.
Geopolitical Implications and Risks
Beijing has called for a ceasefire in the Middle East, and when Trump visited in May and met China's president, Xi Jinping, he claimed the two countries were united in wanting to find a settlement. But the Asia Group report noted: "The crisis allows Beijing to cast the United States as the destabilising actor whose Middle East entanglements impose costs on the world."
There are some risks to China from the instability. Drew Thompson, a senior fellow at the S Rajaratnam School of International Studies in Singapore, said: "It's tempting to see any loss of credibility in the US as a benefit for China, but that's not necessarily the case for Beijing, which does not want to supplant Washington as a Middle East hegemon or provider of security for the region." Wen-Ti Sung, a non-resident fellow with the Atlantic Council's Global China Hub, based in Taiwan, said the crisis could also make Beijing think twice about a future military assault on Taiwan because it showed the difficulty of navigating ships through hostile territory.
The Asia Group's report concluded: "Ultimately Beijing views the pain points not as existential threats, but as challenges to be managed and even opportunities to be exploited."
