The Houthi attacks on maritime traffic through the Red Sea have created a major global crisis driving up the price of shipping and pushing about 90 percent of container ships to opt for circumventing Africa instead of going through the Suez Canal.

As the world’s biggest exporter and a country heavily dependent on oil imports, China should naturally be worried about the potential collapse of shipping lanes through the Red Sea. Much of China’s trade with the EU goes through the Suez Canal, and China has invested in Egyptian and Saudi ports on the Red Sea.

Beijing has vowed to help de-escalate the tensions and is in touch with all parties involved. Yet in many ways, China benefits from the ongoing crisis. The instability has raised its profile as an external power that is being courted by the U.S. and other key players in the Middle East. At the same time, the crisis is seen as a distraction for Washington from the Indo-Pacific region.

U.S. national security advisor Jake Sullivan recently met with Chinese Foreign Minister Wang Yi in Thailand and the Red Sea attacks were among the issues discussed.  Beijing agreed to try to influence Iran to put pressure on the Houthis to stop the attacks. China indeed has some leverage over Iran, but Tehran’s own level of influence over the Houthis is uncertain.

China’s initial response to the Houthi actions was muted. China did not condemn the Houthis and has also not joined a U.S.-led coalition, Operation Prosperity Guardian, that has sought to defend shipping in the Red Sea. China fears that participating in the coalition would send a signal to Arab states that China is siding with the West in support of Israel and not with the Palestinians under Israeli assault in Gaza.

China has made some successful moves in the Middle East by disassociating itself from the West and building closer ties with Iran and other Persian Gulf Countries. Beijing has clearly indicated its support for the Palestinian cause, presented its own peace plan, and been critical of Israel’s ground offensive in the Gaza Strip. In other words, the participation in the U.S.-led coalition could undermine China’s ambitions to present itself as a leader of the Global South.

Standing alongside the U.S., in Beijing’s reasoning, would send a bad signal across the Arab world where China successfully positions itself as a balancer to Washington. Indeed, being tied up in the coalition with the U.S. would only boost Washington’s position, a scenario Beijing wants to avoid.

More broadly, Beijing expects that the instability in the region will further dilute American power and deepen U.S. isolation over the wars in Gaza and Ukraine. For China, these seemingly unrelated conflicts represent one big trend – a gradual decline of the America-led global order.

For Beijing, the conflicts and tensions in the Middle East also serve as a geopolitical distraction for Washington, which China can exploit in the South China Sea. Indeed, this distraction poses a significant challenge to U.S. efforts to contain China. The United States has a history of redirecting its substantial military resources to immediate but less critical issues, rather than addressing long-term, systematic challenges. Thus, the war on terrorism in the early 2000s was a period that both China and Russia used to strengthen their positions in their respective neighborhoods.

Beijing views the ongoing conflicts in the Middle East as yet another example of this pattern, proof of the inadequacies of the U.S.-led global order and a sign of the imminent emergence of a more just multipolar world.

Beyond this grand geopolitical thinking, there are more mundane reasons why China has abstained from active military measures to safeguard shipping in the Red Sea. Despite having a military base in Djibouti, China might lack the necessary military capabilities to participate in the coalition effectively. Another reason could be that for China the situation is not yet critical enough to require intervention. Rising shipping costs have reached only a fraction of what they constituted in the pandemic period – $14,000 for transporting a 40-foot container then versus around $5,000 now. Nor do the bulk of Chinese oil imports transit the Red Sea.

It is also unclear to what extent China can influence Iran. The two have been pushing for closer economic and political ties and the expectation was that Beijing would be able to put pressure on the Islamic Republic when necessary. The past few weeks have shown the limits of such thinking. When on January 26, 2024, it was reported that Beijing reached out to Iran and asked it to rein in the Houthis, a Houthi spokesperson later denied any communication about China. Nor is Iran so dependent on China economically that the latter can change the calculus in Tehran. Trade and investment levels have been falling short of stated expectations.

Ultimately, China’s approach to the crisis in the Red Sea should be seen in the light of what Beijing has been doing in relation to the war in Gaza. China has maintained a cautious stance towards the conflict and focused more on discrediting the U.S. position by emphasizing neutrality and serving as a moral compass for the Arab countries and the Global South at large. The neutrality is inherently anti-Western and based on charting a narrative that contrasts with the U.S. and pays greater attention to the Palestinian cause. Similarities with the public relations handling of the Red Sea crisis are striking.

The impact of the crisis on U.S. global influence remains unclear. The U.S. reputation depends on its ability to bring an end to the Gaza war, facilitate discussions between Israel and key Arab states, ensure the security of major maritime trade routes, and sustain Ukraine’s military efforts against Russia. These goals are now at risk, particularly the Saudi-Israeli reconciliation process, as any significant rapprochement between Israel and Saudi Arabia absent a concrete plan to achieve a Palestinian state would provoke negative reactions across the Arab world and the Global South.

China may step up its diplomatic engagement with Iran and the Arab states to try to end the chaos in the Red Sea. But China will only act if it perceives its economic interests seriously threatened and sees a path for quick diplomatic success. Beijing’s behavior is influenced by a combination of geopolitical, economic, and purely military calculations. In the end, what matters to the West might not be so important to China.

Emil Avdaliani is a professor of international relations at European University in Tbilisi, Georgia, and a scholar of Silk Roads.