China has been able to mitigate the impact of the energy shock caused by the war in the Middle East thanks to its reserves and diversified supply sources, analysts say. According to maritime data analysis firm Kepler, the Asian economic giant, which imports more oil than it exports, obtained more than half of its crude oil imports from the Middle East by sea last year. Since the outbreak of the war with Iran on February 28 of this year, oil shipments from the Gulf have almost completely stopped after Iran closed the Strait of Hormuz, through which 20% of the world's oil production and vast quantities of liquefied natural gas pass. Despite a ceasefire agreement for two weeks, Iran continues to effectively close the strait, allowing only a small number of ships to pass. Moyo Shaw, an analyst at the company 'Kepler', stated that the growing concerns of Chinese leaders about the geopolitical situation in recent years have driven them to develop their capabilities for storage and enhancement of strategic reserves. She pointed out that this plan has currently put China in a much more comfortable position than many of its Asian neighbors, such as Japan and the Philippines. She clarified that China was therefore not forced to 'rush' to use its large strategic reserves. This can be explained by the energy transition that has been committed to for decades. No immediate shock. Meanwhile, co-founder of the Center for Research on Energy and Clean Air (Crea) in Finland, Lauri Myllyvirta, believes that the tremendous development in renewable energy puts China in a 'relatively favorable' position to face the crisis. Wind, solar, and nuclear power plants have been installed in coastal areas with high population density, while improved grids allow for better electricity supply to these areas from inland. Myllyvirta pointed out that without these developments, 'the need for oil and gas imports to supply these provinces would have been much greater'. As for Li Xiu, a specialist in Chinese climate policy at the Asia Society Policy Institute, an American research center, the current crisis 'confirms' the correctness of China's energy diversification strategy. Facing increasing geopolitical tensions, Chinese President Xi Jinping seeks to accelerate the pace of developing renewable energy sources. In a report aired on state television CCTV, Xi called for accelerating the construction of a 'new energy system' to ensure the country's security in this region. Li Xiu indicated that the main risk for China is not an immediate energy shock, but a potential global economic slowdown resulting from the conflict. This will affect many sectors, which will complicate the task of the authorities, which are already suffering from a decline in economic activity. This applies to China's small private refineries, which have long benefited from access to Iranian and Venezuelan oil under sanctions, buying it at low prices. Chinese supplies were affected by US intervention in Venezuela this year, which led to a halt in oil flows from the South American country. The loss of Iranian crude oil could also deal a blow to many of these facilities, which are mainly located in Shandong province (east). These small refineries account for 20% of China's refining capacity and provide many job opportunities, according to Moyo Shaw from Kepler. Another sector is also at risk as the closure of the Strait of Hormuz continues: the semiconductor industry, which is a strategic priority for Xi Jinping. According to researcher Michelle Midan from the Oxford Energy Studies Research Center, the chemical industry may also face 'significant pressure' due to energy disruptions. She stated that the Chinese economy 'will not be immune to rising prices and slowing activity, but the parties concerned have taken preventive measures in case of prolonged disruptions', adding that the impact should be 'contained'.
