When President Donald Trump heads to Beijing for a summit with Chinese President Xi Jinping in late March, the expected agenda will cover familiar topics: tariffs, the trade balance, supply chains, and Taiwan. However, the underlying issue that may dominate discussions is Iran.
On February 28, the United States and Israel initiated Operation Epic Fury, a comprehensive operation aimed at Iran’s military and nuclear capabilities. The operation resulted in the death of Supreme Leader Ayatollah Ali Khamenei, a significant blow to a regime that has wielded power in the region for nearly five decades. Shortly after, his son, Mojtaba, was named his successor, marking a notable transition in a system that has historically opposed hereditary governance.
The conflict is intensifying, and it’s impacting Beijing in ways Xi Jinping likely hadn’t anticipated.
Russia and China: Not Passive Participants
Both Russia and China are providing support to Iran in this war, a point that needs more emphasis than the administration has publicly given. Various U.S. officials have indicated that Russia shares satellite data with Tehran, which includes vital information about the positions of U.S. military assets in the Middle East.
As a result, U.S. military personnel have suffered casualties—seven fatalities from Iranian attacks. While Iranian surveillance and reconnaissance capabilities have been hampered by U.S. assaults, the precision of their missile strikes is likely attributed to Russian assistance.
Retired General David Petraeus has suggested that such Russian intelligence support explains much of the effectiveness of Iran’s military actions. He has called on President Trump to advance sanctions against Russia, fully backed by a significant majority in the Senate. The Iranian Foreign Minister has acknowledged ongoing military collaboration, indicating that it will persist.
A coalition that actively assists in the death of U.S. troops should undoubtedly be a topic of conversation in Beijing.
While China’s involvement is less direct, it remains highly significant.
As American casualties escalate and Iran starts to retaliate, concerns are mounting for President Trump about the prospect of a hasty end to the conflict.
U.S. officials have long cautioned that Chinese firms are actively funneling technology into Iran’s missile programs, with numerous sanctions placed against these companies for their violations. Analysts have also pointed out Iran’s interest in acquiring China’s CM-302 supersonic anti-ship cruise missile, a weapon aimed at threatening naval vessels, indicating that Chinese technology has already been integrated into Iran’s missile systems.
Denial doesn’t equate to innocence.
The Iran War’s Impact on the U.S. Economy
Beijing may openly denounce the war, but the resulting costs for China are significant, which Xi is surely aware of.
China relies heavily on affordable energy, with Iran playing a crucial role in this dynamic. Data shows that in 2025, China imported approximately 1.38 million barrels of Iranian oil daily, which comprised about 13% of its total seaborne imports, mainly through covert networks to dodge U.S. sanctions.
The Strait of Hormuz—gateway for about 20% of global oil—now finds itself at the heart of this conflict, effectively halting tanker traffic. The repercussions for China are clear: soaring energy prices, disrupted supply chains, and the loss of a significant discount supplier all at once.
Crackdown on the Shadow Fleet
Compounding the issue is the U.S. ramping up efforts against the “shadow fleet,” a network of discreet vessels that transport Iranian and Russian oil to China. The U.S. Treasury Department has placed sanctions on many shipping companies involved in this oil smuggling, significantly affecting how Chinese refineries receive oil.
If sanctions enforcement continues to tighten, as it seems reasonable to anticipate, the gray market that has provided Beijing with inexpensive energy will dwindle. New legislation addressing China’s energy dependence will likely be warranted.
Xi’s Dilemma
Though publicly condemning the war, Mr. Xi faces pressure from Chinese energy firms urging Iran not to target Qatar’s liquefied natural gas (LNG) sites, as China imports about 28% of its LNG from there. This dual approach of publicly supporting Iran while covertly asking it not to deplete its resources places Xi in a precarious position.
Transitioning away from affordable Iranian oil is not an overnight task, and the implications of a deceased supreme leader cannot be undone. With China’s GDP growth target set at a modest 4.5%, its economy cannot sustain a prolonged energy crisis. These challenges could serve as leverage for President Trump in negotiations.
Trump’s Strategic Demands
The summit in Beijing isn’t just about trade; it’s a strategically pivotal moment, and Trump should enter it with clear intentions.
First, exerting pressure on Xi to halt Russian support for Iranian attacks on U.S. forces is crucial. Petraeus has underscored that imposing sanctions on Russia is long overdue, but the current geopolitical situation affords Washington additional leverage that should be utilized.
Secondly, China needs to be compelled to cut off the technological pipeline to Tehran. Recent talks between U.S. Treasury Secretary Bessent and Chinese officials indicate that there are already considerations to pressure China into compliance regarding sanctions, and this should include restrictions on arms transfers.
Finally, the rare earth export restrictions imposed by China, retaliating against U.S. tariffs, should be classified as economic aggression. The energy market turmoil from the ongoing conflict provides Washington with leverage that has not been available for years, and any expansion of U.S. LNG exports should come with specific concessions.
The Real Debate in Beijing
For years, Beijing has fostered a partnership with Iran, Russia, and Venezuela as a counter to American influence. However, with Iran’s instability and Venezuela slipping from its grasp, the cohesion of this alliance appears alarmingly fragile.
Xi will likely approach the summit with hopes of restoring stability and showcasing strength domestically. In contrast, Trump should understand that the ongoing conflict with Iran offers a unique opportunity in U.S.-China relations.
Ultimately, the cards are positioned in Washington’s favor. It remains to be seen whether President Trump will leverage this advantage effectively.
