Ambrose Evans-Pritchard
In a contest of “eating bitterness” and enduring economic pain, Communist China has infinitely greater staying power than unruly, grievance-ridden America.
Donald Trump goes to Beijing as the strategic supplicant, badly needing Chinese help to extricate himself from a quagmire that threatens to destroy his presidency and is entirely of his own making.
The price is becoming clearer. Xi Jinping will use his sway in Iran – and it is China that supplies the critical components for the regime’s missiles and drones – to push for a face-saving settlement and a reopening of the Strait of Hormuz.
In exchange, China wants the US to hand over Taiwan’s future on a silver platter, and with it the global epicentre of advanced semiconductor production.
Perhaps the latest US memorandum to Iran, or rather US wish list, will produce something more than the four false dawns that fooled the market before.
Helima Croft, the head of commodities at RBC Capital and a former CIA analyst, says Trump’s eagerness to play down a serious Iranian attack on the Emirates shows just how desperate he is to find a way out before the summer driving season and the mid-terms.
Iran may not let him chicken out except on abject and humiliating terms. “As we have repeatedly stated since the start of the war, it takes two to TACO [Trump Always Chickens Out],” she said.
As I write, Iran is still demanding an end to sanctions, full release of frozen assets, $US270 billion ($373 billion) of reparations, a tithe on passage through the Strait of Hormuz and near-identical terms on uranium enrichment to the Obama deal in 2015.
The Revolutionary Guards have every incentive to string out the process of “no peace, no war, no oil” for another month, lifting US petrol prices far above the Biden peak of $US5.16 a gallon and inflicting excruciating political pain on the Republicans.
By then the world will have run through another 400 million barrels of stored oil and petroleum products, pushing the global system into operational stress, at which point prices may spike violently higher.
Michael Haigh, from Société Générale, says the stress point will arrive by mid-May in emerging economies, and by the beginning of June in richer OECD states with deep reserves.
The one country facing almost no stress is China. Energy experts Kpler said China’s oil imports were running at 90 per cent of pre-war levels in April. It has built by far the largest strategic petroleum reserve in the world – probably 1.5 billion barrels.
China is sufficiently flush to swoop into South Asia as regional saviour, relaunching exports of diesel, jet fuel and naphtha to grateful states.
China has $US6 trillion of usable exchange reserves in one form or another. It can buy as much oil as it wants on the global market. It has capped internal prices of fuel at levels far below global prices.
The country is 85 per cent self-sufficient in energy. It can run its entire electricity system on coal and renewables without gas. It already has 46 million electric vehicles on the road.
The economy is growing at a 5 per cent rate – or 3 per cent on proxy measures – and the housing market is starting to recover in Beijing and Shanghai after a deep slump. Exports are booming and the trade surplus hits new records every month.
Does one laugh or cry at claims that cutting off Chinese purchases of Venezuelan and Iranian crude will bring the country to its knees?
The actual story is that Trump’s war has greatly raised the economic and strategic value of China’s electrotech industries.
It has accelerated the global switch from fossils to solar panels, batteries and electric vehicles mostly made by China. Data from Ember show that China’s solar exports doubled to 68 gigawatts in the single month of March.
Yes, China wants peace in the Middle East and free shipping through the Strait of Hormuz, but it is not in any hurry. The view in Beijing is that Trump’s war has worked marvellously to China’s advantage on almost every level, whether economic, military, diplomatic and technological – or on the scales of civilisational credibility.
All can now see the limits of America’s overstretched military. The war has exposed the Pentagon’s failure to prepare for the age of cheap drones – the flying AK-47s of asymmetric guerrilla resistance.
Beijing can see that the US has squandered precision munitions that will take years to replace and cannot be built without gallium, a rare earth monopolised by China. It can see that the war has denuded East Asian allies of Patriot missile defence batteries and that these countries are not receiving a long list of weapons shipments already paid for.
The question is how far China will go to exploit this moment and tighten its grip on Taiwan. America’s digital economy depends to an extraordinary degree on one belt of foundries near Taipei.
“If the island is blocked or its production capacity is destroyed, it’ll be an economic apocalypse,” said Scott Bessent, the US treasury secretary, in Davos before the war.
The US will not be able to replace Taiwan and manufacture and package its own top-tier AI chips at scale until the early 2030s. By then, the AI superpower race will be won or lost.
Eyck Freyman, a fellow at the US Naval War College, said the risk was that China could test US resolve with “grey-zone” operations and a customs blockade, forcing all ships and flights in and out of Taiwan to pass by the mainland port of Fujian.
The actual story is that Trump’s war has greatly raised the economic and strategic value of China’s electrotech industries.
This would give China access to Taiwan Semiconductor Manufacturing Company’s elite chips and effective access to ASML’s extreme ultraviolet lithography machines – both now denied under US sanctions. It would turn the tables on America and radically upset the global balance of technological power.
Such a customs blockade would pull yet more of Asia into China’s tributary orbit, a process already well underway.
The State of Southeast Asia 2026 Survey Report by ISEAS-Yusof Ishak Institute shows that 52 per cent of that region’s population would now pick China instead of the US if forced to choose.
They deem Trump to be a bigger menace even than Chinese expansion in the South China Sea. What is astonishing is that just 34 per cent of Singapore and 32 per cent of Malaysia would now side with America.
My view is that China will not have to flex its muscles over Taiwan because the island will fall into its hands like a ripe fruit. The Kuomintang Party, which controls Taiwan’s parliament, clearly wants to move into China’s orbit as a lesser poison than today’s rogue America under a hubristic predator.
The party leader, Cheng Li-wun, accuses Trump of trying to hollow out Taiwan’s chip industry and treating the country as an expendable pawn. She wants the Taiwanese to “learn to love being Chinese again”.
The gloomier view is that China has a unique window right now to press its advantage, before America restores its chip capability and before competent grown-ups retake control of US foreign policy in Washington.
China has never sat prettier in the modern age. It is the electrotech hegemon of the future. The West scarcely exists anymore. America and Europe are at diplomatic daggers drawn.
The American defence of East Asia has never looked less credible in the modern era.
Pax Sinica, here we come.
