Iran Conflict Adds Further Pressure on China Already Impacted by Trump’s Tariffs
Image source, Costfoto / NurPhoto via Getty Images
In the rear of one of China’s largest manufacturing hubs, a group of workers gather under a tree smoking cigarettes. At the front of the factory, a sign advertises temporary labor jobs.
“No one understands what our life is like,” said a man who wished to remain anonymous.
“We keep working, working. There’s no real life. Please help,” another worker said, an unusual and risky plea made to a foreign reporter.
Struggling with the challenges of a manufacturing industry shifting from producing cheap, high-volume goods to advanced automated technology, many workers are anxious, unable to earn enough to support their families back home.
All of this is happening amid the global economic uncertainty triggered by the US-Israel attack on Iran.
Double Pressure
After Donald Trump imposed tough tariffs last year, China’s economy faced slowed growth and rising unemployment. Yet China faced these challenges resolutely, increasing exports and growing GDP by 5 percent. But dissatisfaction persisted.
The current Middle East conflict adds new pressures on costs, demand, and employment.
In Foshan, a southern industrial city in Guangdong, advertisements offer work in plastic product assembly or mobile phone installation paying 18 to 20 yuan per hour (a few dollars) for short-term jobs.
“I will try to find work elsewhere,” said another worker from rural areas. Most of these laborers are over 40 and feel discouraged by the growing uncertainty.
Beijing’s calls for ending the war are motivated in part by this economic stress.
Thanks to China’s large reserves of stored oil and its leadership in renewable energy and electric vehicles, it has so far been protected from the worst effects of the fuel crisis. However, ongoing blockages in the Strait of Hormuz intensify the challenges facing China’s export-dependent and slow-growing economy.
“Costs have already increased by about 20 percent,” said a merchant—who wished to remain anonymous—while supervising workers loading fabric from a truck into carts. This fabric is taken to local factories to make garments for well-known brands like Zara, Shein, or Temu.
This is the world’s largest garment market. In Guangzhou, just an hour from Foshan by car, motorcycles, vans, and small trucks filled with bolts of fabric are seen everywhere. Yet the narratives of each merchant and vendor echo similar concerns.
Reliable supply of inexpensive petrochemicals is critical as fabric production cannot proceed without it. High oil prices are already causing problems, and one businessman reports fabric inventory piling up in warehouses due to lowered demand.
If the increased costs are not passed on to consumers, producers must bear them, a difficult prospect for those operating with slim margins.
Opportunities Also Exist
A year ago, when China and the US escalated their trade war, resistance was visible in Guangzhou’s streets. Now, frustration is more apparent.
However, amid uncertainty, opportunities remain.
A short drive from the city, producers were welcoming global dealers at the Canton Fair. Humanlike robots greeted visitors and posed for selfies.
Beijing’s leaders want to portray this optimistic face of China — a future-oriented country developing advanced technology to compete with a US mired in Middle East conflict.
Exhibits included AI-enabled glasses capable of language translation, robotic legs to assist mountain climbing, vacuum cleaners that instantly remove stains, and sleek espresso machines for everyday use.
Merchants reported rising prices for these products, mostly made of plastic, whose production requires petroleum.
Nonetheless, large crowds of buyers were present — the conflict has underscored the importance of sectors where China leads, such as electric vehicles.
According to the China Passenger Car Association, Chinese companies exported over 350,000 electric vehicles in March alone — 30 percent more than the previous month and 140 percent more than March last year.
Middle Eastern nations are key export destinations for China’s electric vehicles, but the ongoing conflict is hindering shipments.
“Last year, 90 percent of our electric vehicle exports went to the Middle East, but this year the war has stopped that,” said merchant Joice Liu.
She has come to the Canton Fair seeking new buyers from Africa and South America. Buyers from India, Bangladesh, and Turkey have also arrived. Some countries have to wait to import Chinese electric vehicles due to rising petrol and diesel prices.
China’s Dilemma
While the war could reinforce China’s push for self-reliance, London-based Chatham House expert Yu Ji believes China is unlikely to win in this situation.
“Ironically, a declining America is exactly what China wants to see. But does China truly want this? It likely prefers a more predictable America that Beijing can manage more easily,” she said.
Beijing wants to avoid antagonizing Trump. She expects China’s stance on the conflict to soften ahead of the scheduled China-US summit in May.
“Beijing wants this meeting to take place at all costs,” she added.
From the sidelines, Beijing has called for a ceasefire and urged its ally Iran to return to the negotiating table. Trump supports this approach as well. President Xi has held meetings and phone conversations with the crown princes of the UAE and Saudi Arabia.
William Figueroa, a professor at the University of Groningen, says China is engaging in diplomatic efforts to “demonstrate to the US and its regional partners China’s serious commitment to its region.”
This has underscored that China is now not only at the economic center of the world but also at the heart of global power.
However, such considerations mean little to Foshan’s weary factory workers.
One worker showed a pass for the Canton Fair. “I cleaned toilets there,” he said with a smile as he took a drag from a cigarette. Despite working 14 hours daily, he earned only 150 yuan, roughly 20 dollars.