Strategy without taking sides: China’s coopetition in the Gulf conflict

Since the escalation of the US/Israel-Iran conflict in early 2026, many analysts have rushed to declare China the "winner." While Beijing has certainly leveraged its deep economic ties with all three parties, its refusal to align with any single side is often misinterpreted. To some, it looks like a hedge against risk or an avoidance of public accountability. However, China is not stepping back; it is leaning in through a different framework: positioning over alignment.

According to Al Jazeera, President Xi Jinping’s recent dialogues with Saudi Crown Prince Mohammed bin Salman emphasize a commitment to "diplomatic means" and the restoration of normal passage through the Strait of Hormuz. This active diplomacy suggests that China isn't sitting on the sidelines—it is operating under the logic of coopetition.

Coined by Adam Brandenburger and Barry Nalebuff, “coopetition” posits that actors can, and should, pursue cooperation and competition simultaneously. By managing the tension between value creation (growing the pie) and value appropriation (getting a larger slice), China maintains its relevance without the burden of an alliance.

Value creation: stabilizing the global commons

China’s historical stance on the Russia-Ukraine and Israel-Palestine conflicts reveals a consistent priority: stability is a prerequisite for trade. For Beijing, a full-scale regional war is a value-destroyer. China’s economic model is too deeply integrated with the three parties to risk a collapse:

• Iran: China is Tehran’s largest trading partner, purchasing approximately 90% of Iranian oil exports and the two countries signed a 25-year strategic investment worth $400 billion, to improve energy, infrastructure and telecommunication sectors.
• Israel: China is a primary source of commodity imports (surpassing the US and Germany at $13.5 billion annually) and a major investor in critical infrastructure like the New Haifa Port.
• The United States: Despite ongoing trade friction, the US remains China’s largest single-nation export market, accounting for 15% of its total exports in electronics and machinery.

Because China cannot afford to forfeit any of these relationships, it creates value by acting as a quiet stabilizer. When ceasefire talks gained momentum in April, reports surfaced that US President Trump had reached out to President Xi to facilitate negotiations. While public credit often went to intermediaries like Pakistan, Bloomberg noted that Beijing played a “pivotal, behind-the-scenes role.” By pushing for a ceasefire, China protects the global economy, which not only creates value for itself but also everyone else, while ensuring its own supply chains remain intact.

Value appropriation: flexibility as an asset

If value creation explains why China engages, value appropriation explains how it wins. By refusing to choose a side, China extracts value from each relationship without becoming dependent on any single one.

The goal here is not just diversification, but asymmetry. By maintaining a balanced distance, China retains flexibility for multiple futures:

• If tensions ease: China remains economically embedded in all major systems.
• If tensions escalate: China remains less exposed than nations that have committed to a specific side.

This is not disengagement. Quite the reverse, China captures value precisely because it remains a viable partner to parties that are themselves in conflict.

The Balancing Act: Selective Engagement

The tension within coopetition is a delicate one. Too much cooperation, such as China taking sole responsibility for regional security, risks creating value that global rivals capture for free. Conversely, too much competition, such as overtly backing one side to undermine the US, could destabilize the global trade system entirely, eroding the very market access and energy stability China seeks to appropriate.

Rather than seeking the "front-and-center" mediator role held by countries like Pakistan, China practices selective engagement. It intervenes only where it can influence outcomes essential to its long-term interests: trade stability and regional balance. This discipline is often mistaken for passivity, but it is actually a strategic allocation of resources. China views itself as a global economic partner rather than a global policeman.

This balance is inherently fragile, which explains Beijing’s guarded public rhetoric. During an April press conference, Foreign Ministry Spokesperson Mao Ning stated, “The use of force does not bring peace. Political settlement is the right way forward.” By leaning on the UN Charter and calls for "stability," China carves out a space that is neither neutral nor aligned, but strategically positioned to protect its interests regardless of who "wins" the war.

The new neutrality

Ultimately, China’s refusal to pick a side in the US/Israel-Iran conflict is not a sign of diplomatic indecision, but a masterclass in coopetition. By simultaneously creating value through regional stability and appropriating value through multi-lateral trade, Beijing has redefined what it means to be a global power.

In a world increasingly defined by rigid alliances, China’s strategy suggests that the most influential position isn't at the head of a coalition, but at the centre of the web, connected to everyone, beholden to no one, and positioned to thrive regardless of how the dust settles.