Houthis and Iran are hurting China’s Red Sea trade

The Chinese are increasingly angry with Iran. Reuters reports that Chinese officials have asked Iran “to rein in attacks on ships in the Red Sea by the Iran-backed Houthis, or risk harming business relations with Beijing.”

That may not sound like much of a threat, but the hidden text is that a lot of the parts for Iranian missiles and drones, along with equipment for Iran’s large-scale nuclear program, come from China.

If China actually cut these supplies off, Iran would have to close its war factories. Thus the Chinese would do to Iran what US export controls completely failed to do to China: shut down access to technology from Asia, the United States and Europe.

It would also hit Russia hard. Russia is buying drones and drone components from Iran. Yes, Russia could get stuff from China – but the Chinese have been anxious to avoid Western sanctions, so they have been careful on what they feed the Big Bear and they prefer an approach to under-the-table transactions that, in Chinese terms, appears to resemble plausible deniability.

China has even more reason than just armaments to be unhappy with the Houthis.

Europe is one of China’s largest trading partners. China’s share of overall imports into Europe rose from 4.6% in 2020 to over 20% today. And what the Chinese have achieved there is even more impressive when we note that a big part of imports to Europe other than from China are in the form of energy (oil, natural gas), including from Russia even now. China’s imports, on the other hand, are made up of a combination of some specialized raw materials (lithium and other rare earths) and the rest mostly manufactured goods.

China is undergoing a serious economic recession, with factories shut down, workers released or