For nearly two decades, American presidents spoke of the need to “pivot to Asia” and confront their main rival—China. None, least of all Trump, figured it’d be the rest of the world that pivots to China … and away from the US.
Trump believed war with Iran would be a cheap win. It turned out to be costly and counterproductive, on top of being the most unpopular war in American history. Iran is holding world trade for ransom, forcing Trump to temporarily drop sanctions on Russian and Iranian oil. Meanwhile, China is seeing an influx of war-weary investors and new demand for its renewable energy infrastructure as the global oil crisis deepens.
China defends “rules-based order”
After World War II, the US established and defended an “international rules-based order.” It dominated the world market, and crafted rules that reinforced American supremacy.
As the world economy’s center of gravity shifted towards China, Washington’s rules turned into their opposite. Trump disdains international law—preferring his “own morality”—while China’s ruling class extols the virtues of free trade, diplomacy, and multilateral institutions.
The blood-soaked American imperialists bomb and abduct adversaries during negotiations. They bully through trade wars and economic blockades. Yet, even after relocating troops and military hardware from bases in South Korea and Japan to the Middle East, they can’t defend their Gulf allies in Saudi Arabia, Bahrain, Kuwait, Qatar, and the UAE.
In response, Saudi Arabia struck an arms deal with Ukraine and is working with China to build a drone factory in Jeddah. Other Gulf States are sure to follow, looking increasingly towards China and Russia for the security that the US can no longer provide.
China had already established strong economic ties with the Gulf, building port terminals, laying telecommunications infrastructure, and selling microchips and EVs to the region. To protect these investments and contrast itself with the unruly US, China met last month with Gulf leaders and pushed a four-point peace plan: “Peaceful coexistence, national sovereignty, international rule of law, and a balanced approach to development and security.”
Who controls the waterways?
Trump’s 2025 National Security Strategy document fretted over the possibility of “hostile” countries exacting tolls from vital trade routes. Within three months of its release, Iran gave life to Trump’s nightmare by closing the Strait of Hormuz to US-aligned tankers, and tolling the rest up to $2 million a vessel. London shipping insurers panicked, canceling some policies and hiking rates on others. Companies in Hong Kong are taking some of their business, offering lower rates to insure freight navigating the Strait.
The kicker for Trump is not merely that dozens of ships have paid the Iranian toll, but that, according to Lloyd’s List Intelligence, at least some of the tolls were paid in Chinese yuan. The petrodollar system is based on a deal between the US and Saudi Arabia, with other Gulf states following suit. The Gulf States sell oil exclusively in US dollars and “recycle” them back into US Treasury bonds and other assets. In exchange, the US is supposed to provide military defense. Now that America has, in effect, broken its end of the bargain, why should the Gulf States hold up theirs?
US bonds and assets have long served as “safe havens” where capitalists move their money during crises and wars. S&P Global Ratings estimates that banks in the Gulf are looking to move $307 billion out of the region as investors look for cover, and Hong Kong is positioning itself as the new safe haven.
According to the Institute of International Finance, China’s bond market brought in $2.5 billion in March. That same month was the worst for US treasuries since 2022. As a result, China’s borrowing costs have dropped to a third of the cost the American government must pay its creditors in interest. Meanwhile, Wall Street firms like Citigroup and Morgan Stanley are increasing staff in Hong Kong, and Deutsche Bank has started issuing bonds in renminbi.
The Chinese “electrostate”
With a major artery for transporting oil and gas clotted, ruling classes around the world are looking for alternatives. “Our future will be at serious risk if we continue to rely on fossil fuels,” said South Korean President Lee Jae Myung. He is one of many heads of state who began looking to renewable energy after the war throttled 20% of the world’s oil and gas.
China is well positioned to profit. It’s built the world’s strongest renewable energy sector, with a near monopoly on rare earth minerals and an industrial base which supplies over 70% of the world’s renewables hardware.
Upticks in demand will temporarily cut across the overproduction and declining profits in the industry. For example, exports of Chinese EVs surged in the war’s first month, increasing 140% over March 2025, relieving the pressure of a 21% decline in domestic sales so far this year. Solar panels, lithium batteries, and the like are set to see similar spikes in global demand.
Already projects to update and expand renewable energy grids are underway around the world, and China is playing the leading role. According to The New York Times, “For many countries, the push to build grids based on renewable energy is creating a new dependence on technology from China. Chinese companies dominate the manufacturing of nearly every component of a modern grid, including solar panels, high-voltage cables, transformers, and batteries.”
Brazil is taking bids from Chinese companies for battery-storage infrastructure. For its part, Egypt saw its energy import bill double from January to March as LNG costs soared. Now, it’s turning to Chinese engineering and wind turbine infrastructure. “When it comes to renewable energy,” said a Cairo businessman, “the world is really relying on China.”