By James Palmer
Welcome to Foreign Policy’s China Brief.
The highlights this week: China considers relevant lessons from the Iran war as the conflict winds down, Chinese President Xi Jinping hosts Myanmar’s leader in Beijing, and Chinese authorities issue national security warnings over “spy turtles.”
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Chinese President Xi Jinping visits the Temple of Heaven in Beijing on May 14.Brendan Smialowski/Getty Images
The Iran war may be nearing its end, after almost four months. On Sunday, U.S. President Donald Trump said the United States and Iran had reached a deal to end the conflict and that the Strait of Hormuz would soon reopen, though details remain scarce.
Assuming—perhaps optimistically—that the war is winding down, how is Beijing likely to react?
China will move quickly to cement relations with Iran’s new power brokers. Before the war, Beijing maintained strong ties with Tehran’s political establishment but had comparatively weaker connections to the Islamic Revolutionary Guard Corps (IRGC), which now seems to be the dominant force within the country.
Chinese firms already have some links with the IRGC, and intelligence channels between the two countries exist as well, but China will likely seek a trusted interlocutor—perhaps an experienced Iranian diplomat who has successfully aligned with the new order. I would not be surprised to see senior IRGC figures quietly invited to Beijing by the end of the year.
If the United States ultimately lifts sanctions on Iran, that could strengthen Chinese willingness to defy U.S. sanctions more openly. Chinese firms could grow bolder in this respect, calculating that any resulting confrontation would be backed by the central government. Beijing has already been experimenting with stronger enforcement of counter-sanctions laws while steadily expanding its own toolkit for economic retaliation.
China is unlikely to follow Iran’s example in disrupting freedom of navigation—for one thing, it doesn’t border a chokepoint like the Strait of Hormuz—but it may be more willing to exploit its leverage over critical supply chains.
On the energy front, China will counterintuitively be more interested in oil imports than before. Though the Iran war has accelerated the global push toward renewable energy, China has already pushed that transition as far and as fast as it can go. Most of the Chinese economy still relies on fossil fuels.
China weathered the disruption to its Iranian oil imports well and even maintained some fuel exports during the conflict. However, this resilience was thanks to a massive, if opaque, strategic oil reserve. Drawing on that stockpile kept global oil prices from soaring, but questions remain about how large it was going into the Iran war and how depleted it is today.
Most estimates place China’s strategic oil reserve at roughly 1.3 billion barrels. The country’s oil imports dropped from around 11.6 million barrels per day in 2025 to 7.8 million in May, but it is expected to withdraw about 1 million barrels per day from its reserve in the coming months. That means China is probably well stocked and can afford to wait until prices drop to replenish.
Even so, China will look to diversify its oil supply, perhaps relying more on Russia and Latin America. China will also be appropriately self-interested in taking advantage of Iran’s deepening economic crisis to get lower prices on oil, much as it engaged in energy negotiations with Russia after its full-scale invasion of Ukraine.
Finally, Beijing will closely watch how long it takes the United States to replenish its weapons stockpiles in the wake of the war. Although there has been plenty of reporting on how slow the process could be, Chinese leaders do not trust journalists or open-source information—which they believe is tightly controlled everywhere, as it is in China.
I expect to see a surge in espionage, both digital and human, directed at finding this out. Fortunately for China, U.S. counterintelligence is at its weakest point in decades.
Xi turns to Myanmar’s junta. On Tuesday, Chinese President Xi Jinping welcomed Myanmar President Min Aung Hlaing, who led a 2021 military coup in the country, in Beijing for the first time since his April election following China-backed polls. China initially hedged its bets in Myanmar in the aftermath of the coup, cultivating ties with ethnic armed forces amid the ensuing civil war.
Xi’s endorsement suggests China is now leaning more decisively toward the junta. Min Aung Hlaing’s visit follows another by Wang Yi, China’s perpetually overworked chief diplomat, to Myanmar in April as well as Beijing’s efforts last year to pressure rebel groups to back down by cutting off access to arms supplies.
China’s priorities remain largely unchanged: protecting its citizens and its business interests as well as the security of its border.
Pursuing the latter objective has required China to cut deals with both Myanmar’s military—which plays a significant role in drug, gambling, and online scam networks—and the criminal groups, many of them ethnically Chinese, that control large swaths of the borderlands. China has aggressively extended border fencing this year, at times into Myanmar’s territory.
Maritime espionage? China’s Ministry of State Security has warned that unnamed foreign adversaries are attempting to map the country’s coastline using “spy turtles” and “spy fish” fitted with electronic sensors, saying it had captured several such creatures this year.
On the one hand, this is not quite as ridiculous as it sounds: The United States and Russia have both enlisted trained dolphins and seals for military purposes. On the other hand, it is still ridiculous. Turtles and fish can’t be trained for such missions, and any intelligence service interested in gathering coastal data would have access to far more effective tools, such as underwater drones.
A more likely explanation is that local authorities mistook scientific monitoring programs, which sometimes electronically tag animals to track their movements, for the black hand of the CIA—reflecting a paranoia that is relatively common within Chinese state security.
Anthropic suspends new model. Last Friday, Anthropic announced that it would suspend its powerful new artificial intelligence model after U.S. authorities ordered the company to ban foreign nationals from accessing it. The abrupt decision points to how much the AI race is affecting U.S. national security thinking.
As Chris McGuire—a former U.S. State Department expert on AI, chips, and China—pointed out, the chaotic decision-making process reflects a belief among some policymakers that Anthropic’s latest models pose genuine security risks.
Whether a ban on foreign nationals can be maintained is another question, especially given the Trump administration’s receptiveness to lobbying from major technology firms such as Nvidia on issues related to China.
Retail slump. This week brought more bad news for the Chinese economy: Retail sales unexpectedly contracted in May for the first time since 2022. Despite Beijing’s best efforts to stimulate consumption, Chinese households continue to save at exceptionally high rates.
This trend reflects persistent geopolitical uncertainty over war, AI-driven job loss, and the broader economic environment after the COVID-19 pandemic. I discussed this dynamic at length in an essay for Foreign Policy’s Summer 2026 issue, “The End of the World as We Know It.”
That caution is also affecting the electric vehicle market. In May, EV sales within China dropped year-on-year for a fifth straight month, prompting companies to renew the brutal price war that Beijing has spent months trying to suppress.
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