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Chapter 1: How is the Iran war reshaping U.S. military focus in the Middle East?
Thank you. Thank you. Head to davidprotein.com slash prop G where they're offering a special deal for our listeners. Buy four cartons and get your fifth free. You can also use their store locator to find David in stores at a retailer near you. Mormons are having a moment. But some in the church wonder if that's actually a good thing.
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Chapter 2: What are the implications of the Iran conflict for China’s strategic interests?
and what it'll actually take to build a better financial future. Listen wherever you get your podcasts or watch on youtube.com slash yourrichbff. The Chinese are playing a long game in the Middle East, but also a long game around the world. So the China of today is far deeper in the Middle East, including the Gulf, including Iran, including Iraq.
When Western companies are not so forthcoming to build things, the Chinese are always there to build things. So that tells a lot about China's presence in the Middle East. I think what is clear is that when this war is over, it's going to be a very different Middle East. Welcome to China Decode. I'm Alice Han. And I'm James King.
In today's episode of China Decode, we're discussing how the Iran war is helping China, why Chinese universities are rising in global rankings, and why China's EV giant wants to join Formula One. That's all coming up. But first, let's do a quick check-in with how the Chinese markets are starting off the week. On Monday, the Shanghai A-Share Index closed down 0.3%.
The Hang Seng H-Share Index ended the day up 1.5%.
Chapter 3: How are Chinese universities rising in global rankings?
The Hang Seng Tech Index surged almost 3% after famed investor Michael Burry suggested that it may be undervalued. BYD jumped 8%, its biggest gain in over a year on news of significant demand coming out of Latin America. And China National Offshore Oil Corporation declined over 1% amid escalating tensions in the Middle East. All right, let's get into it.
The war with Iran is starting to ripple far beyond the Middle East, all the way to Asia. Now, for years, U.S. officials have said the Indo-Pacific is America's top strategic priority because of China. But now, as the conflict with Iran escalates, the Pentagon is pulling missile defenses, warships, and other military assets out of Asia to reinforce the Middle East.
Now joining us to talk about the broader implications is John Svekianakis, chief economist at the Gulf Research Center with decades of experience in the Gulf and Middle East region. John, thanks so much for being here. Thank you. This is a very fast-moving situation. We're seeing a lot happening in the Straits of Hormuz.
Would you say that this war risks pulling the US back into the Middle East, just as it was trying to pivot towards Asia? Absolutely.
Chapter 4: What factors are contributing to China's surge in scientific output?
I think they're back into the region. And this is not going to be a short-term event. It's going to be far longer than what they anticipated or what they portrayed to the rest of the world. One, because regime change hasn't happened. It will take much longer.
And two, for regime change to happen, you need to have more of a firepower, greater firepower, because Iran is a true enemy, a force to reckon with. And they have gone through the decades of experience war with Iraq, and they don't care of sparing people to fight this war. So the Iranians are notoriously capable in wreaking havoc in the Middle East and in the Gulf in particular.
John, a couple of years ago, China was involved in, it seemed, diplomatic discussions between the Iranians and the Saudis to revive the diplomatic relations. And at the time, there was a feeling that China had a diplomatic presence and an interest to bear in the region. When you look at China today, it's been, I think, remarkably quiet on this issue.
How do you think the Chinese are regarding what's happening internally? in the Middle East. Are there opportunities or are there real risks to China's position in the Middle East and its oil interests, which remain the paramount concern?
Chapter 5: How is BYD positioning itself in the global electric vehicle market?
The Chinese are playing a long game in the Middle East, but also a long game around the world. I don't see any interest, any true gains that the Chinese can have by getting involved in the Middle East, besides the commercial interests, besides safeguarding the freedom of passage and vessels that provide and cater for the energy needs of China. But for the Chinese to get involved militarily,
beyond their commercial interests, I find a lot of dangers and very few gains for the Chinese, especially as the US tries to get involved, as the US is getting involved with Israel in restructuring the Middle East. Remember, this is not just a game to change Iran. It's a bigger game, so to speak, but a bigger play to restructure the way the Middle East map has been formulated.
So this is a game changer for the U.S., and China doesn't want to get involved. Likewise. Israel won't get involved in whatever China wants to do in Southeast Asia, in Taiwan, and so forth. China sees the same way in a similar vein in the Middle East.
And John, just zeroing in a little bit on the Straits of Hormuz, which seems to be the focal point at the moment, President Trump has said that he wants several countries, and he also mentioned China among them, to help with the shipping situation to get some of the tankers through the straits. As you've mentioned, it doesn't look like China is responding too warmly to that.
But could you ever see a non-military role for China in helping to either de-escalate the situation or maybe help some of the shipping get through the Straits of Hormuz?
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Chapter 6: What would China's entry into Formula One mean for the sport?
I'm very circumspect. Because one, the Chinese are able to get their vessels or Iranian oil. As we know, most of the Iranian oil goes to China. As long as that oil finds passage through the straits, which the Iranians can safeguard, I don't think the Chinese will gain by getting involved, even on a commercial basis, even on issues like safeguarding free passage of other vessels.
Or if we get into the issue of mines, getting the Chinese to demine the Gulf. And remember, there is a commercial relationship that binds Iran with China far longer than anything else. So I think the Chinese are observing, watching. They're staying away from being criticized, providing military hardware to the Iranians,
They want to be watchful because this crisis is going to be much longer and deeper than we initially envisaged or we were told by the U.S. So, John, on top of being a Middle East expert, you're also a bit of an oil whisperer. So I really want to get your take on what's actually happening in oil markets, you know, where we're going to be in a couple of weeks from now.
And more importantly, for the China perspective, what is actually happening in the strait? We get these conflicting stories about tankers passing through.
Chapter 7: How is the F1 Grand Prix influencing tourism in China?
There's a narrative that China gets precedence because of the strategic relationship with the Iranians and the Ayatollahs' sons abiding by that relationship. Walk us through what's happening in the strait right now, and is it true that China is getting preferential treatment in terms of still accessing the strait moving forward?
So far, the Chinese are getting preferential treatment, yet what we don't know is the exact amount of of vessels going through, oil tankers going through. One, because there isn't a lot of transparency. Two, the logistical aspect requires that they go silent for a while. And three, we don't have enough data points.
But it's not just the Chinese, it's also the Indians that can get some vessels and some shipments of crude oil through the straits. But what seems to be going on is that the market last week and the week before was spooked. Hence, we saw the spike. Now the market is beginning to take notice of what exactly is happening to the war. Is this a long war, a short war?
And I think this week will be very crucial because we will go into the market thinking that this is going to be a longer war. And as a result, prices could be spiking a bit more than we witnessed before. Having seen this and having said this,
Chapter 8: What are the future prospects for China's automotive industry?
If we had this crisis 20 or 30 years ago, clearly oil would not have been at $100. I believe that from day one, 20 years ago, oil would have spiked to $150, if not $200. And I think the geopolitical premium that we've all discussed in the past has in a way been priced in, but also the importance of geopolitics has shifted. The U.S. today exports a lot of oil. It's self-reliant on oil.
And really, Gulf oil goes to Asia. And on top of this, China today has stockpiled a lot of oil. Remember, given what we know, China today has about three months, maybe four, worth of crude oil. And also in terms of natural gas, China is able to shift from natural gas to coal. And that makes it a little bit more versatile.
And also the war is happening at a time when we go into the spring and summer months. So the demand for heating fuel, transportation fuel evolves and changes. But China is a little bit more independent than we could have said 20 or 30 years ago. And also there is storage and the strategic reserve unfolding that will help the market.
But this week is very crucial because if the straits remain closed and if the Iranians actually do mine, the straits, that becomes very difficult to solve because it's going to be a long campaign and that could really shift the way markets appreciate the supply of oil and that could spike oil prices up.
You say it's going to be a long war, and some say that it could also become a more regional war. I'd like to get your take on that. Do you think that there is a very significant risk in that regard? And if that was to happen, maybe that draws China in to some extent. I've been looking at some of the numbers. In addition to the fact that China gets 38% of its imported oil from
through the Straits of Hormuz. China's also invested huge amounts of money in the major countries of the region, about 300 billion US dollars over the last 20 years or so in Saudi Arabia, UAE, Iraq, Egypt, Turkey, Israel, and other countries, including Iran. If It becomes a regional war, John.
Do you feel that this basically kind of cannot resist but, you know, to try to protect its interests, these very significant interests that it has? I completely agree that... commercially, China is big in the Middle East, and it has been doing exactly the same thing as it has been doing in Africa, providing credit, facilities, construction companies, and so forth.
So the China of today is far deeper in the Middle East, including the Gulf, including Iran, including Iraq. When Western companies are not so forthcoming to build things, the Chinese are always there to build things. That tells a lot about China's presence in the Middle East.
Having said this, if we go into a regional war, which I don't expect because the Gulf states will not retaliate, and if they do retaliate, it'll be measured, it'll be more guided by the US. This is a US-Israel war, and it's becoming more of a US war, a Trump war. than anything else.
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