The Red Sea Parts for Chinese Shipping, But for How Long?
Escalation in the Red Sea
Anglo-American bombing raids have now repeatedly targeted Houthi positions inside of Yemen, an escalation in response to an inconsistent series of missile attacks and incidents of piracy against international shipping transiting the Red Sea. The Houthis and others in the Middle East assert that these attacks are against Israel and its allies, and are intended to support Hamas and the people of Gaza. As tensions rise, China is once again placed in a tight spot, both economically and diplomatically.
As Beijing has recently attempted in recent conflicts around the world, its position on the Red Sea crisis appears to be an air of aloof neutrality. On January 9th, China, alongside Russia, Angola, and Mozambique, abstained on a UNSC vote to condemn Houthi attacks on Red Sea shipping, allowing the resolution to pass 11-0. This mirrors its October 2022 vote in condemnation of Russia’s invasion of Ukraine.
An Economic Dilemma for Beijing
The economic costs of reducing Red Sea trade could be enormous for China and the world. When the Suez Canal was blocked by a grounded ship in 2021, it added two weeks and almost $9.6 Billion per day in total global shipping costs. According to researchers at the Dalian Maritime University, a reduction in shipping through the Bab al-Mandab Strait or the Suez Canal, both impacted by the present crisis, would have the greatest impact on the cost of Chinese shipping, relative to other global shipping chokepoints. As a primary trade route between China and the European consumer market, a shutdown of either of these straits could significantly reduce trade between China and Europe, one of China’s most important trade partners. China has also directly invested enormous sums of money in the Red Sea region, projects which could be placed in jeopardy by the Houthi attacks.
The Diplomatic Situation for China: The Beijing Straddle
The diplomatic impact of China’s actions is likely to be somewhat more mixed, however. President Xi has been eager to present China as a positive alternative to American global hegemony. China, for example, has acknowledged the linkage drawn by the Houthis between the war in Gaza and their attacks on Red Sea shipping, a link that the US has been hesitant to directly acknowledge. As it has done regarding the crisis in Ukraine, China noted that the US and UK are at risk of adding “fuel to the fire” of the situation in the Red Sea, while making a general plea for “relevant parties to exercise calm and restraint to avoid further escalation of tensions.” At the same time, China has called for an end to Houthi attacks on shipping. China expert Evan Feigenbaum coined the term “Beijing Straddle” to refer to China’s policy of publicly supporting the challenger to the international order but refraining from providing material support to any of the involved parties. Beijing has a major material interest in the restoration of peace in the Red Sea, and so will likely allow the US-led coalition to do its work while critiquing from the sidelines. In a recent meeting, Jake Sullivan raised concerns about the attacks in the meeting with Foreign Minister Wang Yi, but the US failed to prod China into pressuring Iran to stop Houthi attacks in the Red Sea.
China has already begun to reap material benefits from this policy of neutrality. Shipping companies with ties to China are taking advantage of China’s neutral reputation to broadcast their ties to China over maritime communications, along with other messages. Shipping firms believe that messages such as “ALL CHINESE CREW” will keep their ships safe. It was initially unclear whether this practice would be effective in avoiding targeting by the Houthis, but it reflected an initial perception among the shipping industry that Chinese shipping interests are exempt from targeting. The Houthis made a recent move toward formalising this policy by announcing that they will allow Chinese and Russian ships to pass undisturbed through the Bab -al-Mandab Strait. It is not clear whether this major Houthi policy shift comes as a gesture from the Houthis, or as a result of Chinese diplomacy.
Aloof neutrality in this crisis carries long-term risks to China’s diplomatic credibility in the region, however. Having very publicly brokered a détente between Iran and Saudi Arabia in March of 2023, any perceived support for the Tehran-aligned Houthis in a matter such as a strait closure could strain Beijing’s relationship with Riyadh. If Beijing does not take a stance, it could eventually reduce its credibility in the region. Taking a stronger stance could be even more problematic as well, straining its relationship with Tehran, which Beijing views as a fellow challenger to the US-led world order.
An Increasingly Complex Situation for Beijing
The risks of more significant escalation are real, if not likely. Iran recently seized a tanker near the Strait of Hormuz in retaliation against US sanctions, echoing Houthi actions near the Bab al-Mandab Strait. A closure of the Strait of Hormuz by Iran could have a catastrophic impact on the global economy, China’s energy costs, and perceptions of Iran across the region. Any indication that China might take a neutral-to-supportive stance on such an event is diplomatically risky. China may receive an exemption, similar to the one offered by the Houthis, but counting on one is unwise.
The enormous risks to China’s economy, at a time when China is desperate to boost low consumption and restore flagging exports, indicates that China is willing to find a middle ground between its material interests and diplomatic goals and risk an economic hit for what it believes will be long-term diplomatic gains. By minimising its involvement in global crises, China allows third countries to attribute to it the best of intentions while framing its rivals as malign. Perhaps the most important reason for Beijing’s inaction, however, is that this is an option open to it. If the US-led coalition will address the issue without requiring Chinese involvement, China can minimize the diplomatic risks accrued while allowing others to clear the way for Chinese shipping. Unless more directly challenged on the point of becoming a “responsible stakeholder” in the global system, China will continue on its current path.