China’s Inaction on Energy Support Draws Concern from Belt and Road Partners

Customers linked to China’s expansive Belt and Road Initiative (BRI) are seeking assistance from the Chinese government to manage surging energy costs triggered by the conflict in Iran. However, China’s response has been notably sparse. Instead of providing aid, the country is reportedly halting fuel exports to conserve energy reserves and safeguard its economy.

A recent report highlighted that China’s reluctance to assist its BRI partners, such as Bangladesh and Thailand, could create political complications. After all, China has made bold promises to these countries regarding energy and economic stability.

Despite some agreements being more than mere declarations—with binding contracts encouraging expectations—China is still hesitating to deliver on its pledges during this crisis.

In mid-March, China had already prohibited refined fuel exports, aiming to boost its gasoline storage capabilities. Recently, with ongoing pressure from BRI nations, it was announced that the export ban would persist until April, with only slight exceptions. Insiders estimate that during this period, China may only ship between 150,000 and 300,000 tonnes of fuel, which is significantly lower than initial projections.

While Chinese officials have not elaborated on the ban, they have vaguely indicated that they would supply fuel to Southeast Asian customers in the upcoming weeks.

Interestingly, reports from ship tracking sources noted that two Chinese tankers recently arrived in the Philippines, with another docking in Vietnam. However, it remains uncertain whether these shipments were arranged prior to the ban’s implementation. Shipments that cleared customs by March 12 were to be exempt from the restrictions.

Countries like Malaysia and the Philippines are also voicing concerns over reduced fertilizer shipments from China, a major global producer of this commodity.

Even before the conflict in Iran prompted concerns over the Strait of Hormuz—critical for shipping fertilizer—China had already been modifying its export levels to control domestic prices for its farmers. Should current patterns continue, China’s fertilizer exports might decline nearly 50% in March and April.

Matthew Begin, a senior commodity analyst at BMI, noted a consistent trend: during global crises, China tends to restrict supplies rather than offer assistance. He mentioned that export restrictions arise from tight domestic balances, with China prioritizing food security to shield its market from price spikes.

China’s growing dissatisfaction amongst BRI partners is partly due to its substantial fuel reserves, estimated at approximately 1 billion barrels. Despite having built up this capacity over time, the Chinese government appears reluctant to utilize it, even as partners face their own energy shortages.

China continues to receive some crude oil from Iran, allowing it to maintain stable retail gas prices and minimize the economic fallout from the conflict.

Consequently, several Southeast Asian nations are resorting to fuel-saving strategies that impact productivity. There have been reports of labor unrest in countries like Sri Lanka and the Philippines, where transport unions are striking to push for government subsidies to alleviate rising fuel expenses.