Surveying his geopolitical scorecard last year, Xi Jinping had reasons to be cheerful. China’s leader stared down his American counterpart, Donald Trump, in a trade war, presented a vision of a new world order at a military parade and stalled efforts to oust a Hong Kong-based company from ports it runs on the Panama Canal.
Today, the world looks more unsettling for Mr Xi. America’s capture of Nicolás Maduro in Venezuela robbed China of its closest partner in South America and its biggest arms buyer in the region. It also affects about 4% of Chinese crude oil imports and may force China to write off some $10bn in loans. Mr Trump’s threat to curb China’s presence in the western hemisphere puts many other Chinese interests at risk, including ports, satellite ground stations and billions of dollars in trade. In Iran, meanwhile, unrest backed by American-led sanctions and military threats has shaken another autocracy. It supplied 12% of China’s oil imports last year and buttresses China’s heft in the Middle East.
Mr Xi probably hopes that Mr Trump’s adventurism will backfire, embroiling America in multiple crises that distract his attention from China. If America restarts its efforts to commandeer Greenland, China will relish the (probably terminal) damage that would do to NATO and to American relations with Europe. But like America’s Western allies, China now understands that appeasing Mr Trump does not guarantee his moderation later. Mr Xi will be reluctant to sacrifice more of China’s interests without greater certainty about American intentions.
The Chinese leader thus faces an unfamiliar dilemma. Should he push back harder against American coercion in an effort to protect interests far from China’s shores? Or should he take the hit to his global ambitions in the hope of doing a deal with Mr Trump that helps with China’s more immediate priorities: its economy and—perhaps—progress towards unification with Taiwan? The two leaders may meet at least three times this year, including at a summit in Beijing in April.
China lacks the capabilities to pull off an armed intervention in Latin America or the Middle East, despite its growing military muscle. Nor can it supply enough weapons to friendly governments to guarantee their survival. China’s arms exports to both regions account for only a small share of its global sales. Increasing them would take time and big financial outlays from buyers, or loans on a scale that China is reluctant to provide. Besides, as the biggest buyer of Chinese weapons in South America, Venezuela is now a cautionary tale for other potential buyers, given the apparent failure of its Chinese-made air-defence radars.
Still, China has other tools at its disposal to obstruct American goals. The Trump administration promises to exclude China from Venezuela’s oil industry. But Chinese engineers and technology already operating in the sector may be needed to stabilise and boost production. One Chinese joint venture alone accounts for more than 10% of Venezuela’s production. China’s status as Venezuela’s biggest oil buyer in recent years also gives Mr Xi some bargaining power, given that the Trump administration has allowed some sales to Chinese refineries to resume. After all, there is limited global demand for Venezuela’s sticky, sulphurous crude.
Chinese companies are embedded in other parts of Venezuela’s critical infrastructure, too. Its mobile-phone networks rely on technology from Huawei and zte, two Chinese telecommunications giants. zte also developed Venezuela’s “Fatherland Card” system, which is used to track voting patterns, monitor social media and ration food. Another Chinese firm provided the Maduro regime with an internet censorship system. One irony of America’s intervention is that with no plans to restore democracy, it now depends on this repressive Chinese technology to maintain political stability.
Elsewhere in Latin America, China can take steps to enhance the resilience of friendly governments. That could entail providing more equipment and training to help protect leaders, boost snooping efforts and bolster policing. China has done similar stuff across the region in recent years. It could also share more intelligence and use its capacity to manipulate public opinion through social media to stir up anti-American sentiment.
In Iran, too, China can enhance the regime’s capacity to maintain control. Before the recent unrest, it had already quietly helped expand surveillance architecture using drones and facial-recognition software. Chinese companies have also strengthened Iran’s internet controls, which the regime has used to impose communications blackouts. Unless the Iranian regime is toppled, such co-operation is likely to continue, according to Fan Hongda, a Chinese expert on the Middle East.
A bolder way to hamper American efforts in the Middle East would be through Yemen’s Houthi rebels, who are backed by Iran and whose missile and drone strikes on Red Sea shipping disrupted global trade from 2023 to 2025. Although China has always denied supporting the Houthis, America has accused Chinese companies of helping the rebels acquire drone components and satellite imagery to target American warships and international vessels.
Yet the dangers of overtly impeding American goals now seem far greater. Chinese scholars are rapidly reassessing Mr Trump’s appetite for risk. “We traditionally believed that in an expansionist phase, the us would likely adopt large-scale invasions like those in Iraq and Afghanistan,” explained Sun Yanfeng, a Latin America expert at a think-tank linked to China’s Ministry of State Security, in a recent television interview. The Venezuela raid, he suggested, shows that “the way the us asserts its hegemony and its tactics have undergone a major change.”
That will shape China’s approach to the possible summit with Mr Trump in April. After resisting America’s tariff onslaught, Chinese officials had been confident of finalising a trade deal on relatively favourable terms and possibly reaching a new understanding on Taiwan. Both might still be possible. But the viability of any agreements could also depend on the extent to which China resists the Trump administration’s broader global plans. One potential spoiler is the 25% tariff that Mr Trump recently threatened to impose on countries trading with Iran.
The question then is how extensive those global plans are. Jin Canrong, an expert on international affairs at Renmin University in Beijing, writes that an American military strike on Iran is still likely this year. He thinks the Trump administration will exert increasing pressure on left-wing regimes in places such as Cuba, Colombia, Nicaragua and Brazil (once again). And he expects America to grab more resources in Africa, too, or at least to prevent China from getting them.
The potential cost of all that, though significant, would still be manageable for China if the pay-off is a sphere of influence of its own. America may not succeed in all its efforts. Even if it does, many of the governments it targets would still need to do business with China. But acquiescence would involve a big recalibration of Mr Xi’s global ambitions. And if it turns out that America wants to dominate the western hemisphere, while still denying China its dominance of Asia, Mr Xi’s forbearance could prove a costly mistake. ■
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