Since late 2023, Yemen’s Houthi rebels have created significant disruption to global shipping, with their relentless attacks on commercial vessels in the Red Sea. These actions, largely fuelled by Iranian support, are intended to pressure Israel amidst the Gaza conflict. In response, several of the world’s largest shipping companies have had to reroute their vessels around Africa, effectively avoiding the Red Sea altogether. This has led to a staggering 300% increase in freight costs from Asia to Europe between October and March. As nations like India undertake efforts to safeguard this vital trade corridor, they face the dual burden of potential financial costs and reputational risks.
The Red Sea is a crucial global trade route, and its current status as a conflict zone has exacerbated tensions between the Houthis and their adversaries. Despite this turmoil, an unusual pattern has emerged: while global shipping companies suffer, Chinese vessels appear largely untouched by Houthi attacks. China moves approximately $280 billion worth of goods through the Red Sea annually, accounting for nearly 20% of its maritime trade. Yet, while other nations’ ships are attacked or rerouted, those associated with China are mostly left unscathed. This anomaly has raised suspicions that China may be covertly supporting the Houthis, indirectly enabling their activities through its substantial oil trade with Iran.
China’s energy strategy is intricately linked to Iran. It purchases about 90% of Tehran’s oil exports, and much of this oil is sold through Iran’s Islamic Revolutionary Guard Corps (IRGC), particularly its Quds Force, which then channels the revenue to various militant groups across the Middle East, including the Houthis. By buying Iranian oil despite international sanctions, China is indirectly funding the Houthi rebels, who have been using these funds to disrupt Red Sea shipping lanes, affecting global trade networks.
On a larger geopolitical scale, China’s close ties with Iran are evident. Both nations support Russia’s war effort in Ukraine, using the Red Sea as a critical corridor for Russian supplies. China’s continued illicit oil purchases from Iran help finance the Houthis and other proxy groups in the Middle East. This is how China has effectively funded the Houthis’ disruptive actions in the Red Sea.
This strategy reveals a paradox: while China aims to destabilise certain regions to leverage its influence, this approach can also undermine its own interests.
Houthi Attacks And The Impact On Global Trade
The Houthis have significantly disrupted one of the world’s most vital maritime corridors, leading to a drastic 60% reduction in ship traffic through the Red Sea. These attacks have forced major shipping companies, such as Maersk, to reroute their vessels around Africa, increasing shipping times and costs. Ironically, these disruptions also threaten China’s economic interests, given its heavy reliance on these routes for trade with Europe.
Despite having the resources and facilities to intervene, China has not taken any military action to address the Red Sea crisis, unlike India. Instead, it has chosen a calculated strategy of inaction. Houthi attacks have not significantly harmed Chinese interests; Chinese ships have managed to signal their nationality and secure safe passage.
Intelligence Insights Into China’s Covert Support
There are growing indications of a covert understanding between China and the Houthis, likely brokered through Iran. According to intelligence reports, the Houthis have been directed to avoid targeting Chinese vessels, aligning with China’s ongoing purchase of Iranian oil. This tacit agreement was underscored by Houthi spokesperson Mohammed al-Bukhaiti, who stated that Russian and Chinese ships would be given safe passage through the Red Sea. Furthermore, the South China Morning Post reported a pact between the Houthis, Russia, and China, arranged in Oman, where Chinese and Russian ships would be spared from Houthi attacks in exchange for future political support in the UN Security Council.
There is also evidence that China has increased its shipping traffic through the Red Sea amid the crisis. While containership transits have decreased overall, the proportion of China-linked tonnage has surged, driven by increased trade with Russia. Smaller Chinese companies like Sea Legend Shipping have even expanded their operations to various Red Sea ports, suggesting that China is taking advantage of the situation to strengthen its economic foothold.
China’s Strategic Dilemma
China’s covert support for the Houthis through its oil purchases from Iran presents a strategic conundrum. While it benefits from discounted Iranian oil, indirectly supporting the Houthis’ maritime attacks destabilises a crucial trade route, potentially harming global commerce and, by extension, China’s own economy. The recent missile strike on the Chinese-owned Huang Pu ship, despite assurances from the Houthis, highlights the precariousness of this arrangement and raises questions about the reliability of such covert alliances.
The crisis has also revealed China’s ambivalence about its military role in the region. Since 2008, the Chinese Navy has maintained a presence in the Red Sea for anti-piracy missions, yet it has refrained from intervening in the current conflict, opting instead to benefit from the instability.
Implications For China’s Global Strategy
China’s involvement in the Red Sea conflict through its covert support for the Houthis has far-reaching implications for its global strategy. While this support has secured temporary protection for its vessels, it may inadvertently undermine regional stability, crucial to China’s Belt and Road Initiative and broader geopolitical ambitions. Continued disruptions in the Red Sea could isolate China both diplomatically and economically, threatening its manufacturing sector’s growth and its global trade routes.
The Houthi attacks have already forced many international shipping companies to reroute vessels, leading to increased costs and extended delivery times. For China, whose exports are heavily reliant on these routes, these disruptions could jeopardise its energy and food security, exacerbating domestic challenges amid a slowing economy.
China’s covert support for the Houthis demonstrates the complexities of global geopolitics. While Beijing has managed to secure short-term advantages, it faces a critical decision: continue supporting the Houthis at the risk of further destabilising the region or reassess its strategy to protect its economic interests. The outcome of this delicate balancing act will significantly impact global trade and security, shaping China’s role on the world stage.
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