Lin Yifu: China is a "giant aircraft carrier," and the Middle East situation has a relatively small impact on China's economy.

Ask AI · How does Lin Yifu assess China’s response to the Middle East crisis?

On March 30, the China Public Diplomacy Association held a special press briefing salon on “China’s New Development, the World’s New Opportunities” in Beijing. (Photo by Nie Shuyi)

On March 30, the China Public Diplomacy Association held a special press briefing salon on “China’s New Development, the World’s New Opportunities,” themed “Lin Jia 7th Salon,” in Beijing. Alongside Yin Yanlin, vice chairman of the 14th National Committee of the Chinese People’s Political Consultative Conference (CPPCC) Economic Affairs Committee, Lin Yifu, president of the Institute of New Structural Economics at Peking University, and Liu Yue, deputy director of the External Economic Research Institute under the Macro Economic Research Institute of the National Development and Reform Commission, representatives held a discussion and exchange with Chinese and foreign reporters.

At the salon on that day, the Middle East situation’s impact on China and the world economy was a hot topic. When answering a question from a reporter of The Paper (www.thepaper.cn) about what impact the current Middle East situation might have on China’s economic development, Lin Yifu said, “China is like a large ‘aircraft carrier’; as long as it does its own work well, no matter what the external environment is like, it can maintain the growth targets we have set.”

Lin Yifu said that the oil price increases triggered by the current Middle East situation do indeed have an adverse impact on the economic growth of oil-importing countries, but the extent depends on the specific circumstances. He analyzed that, compared with Japan, South Korea, and some Southeast Asian countries, China’s oil import sources are more diversified, and China also has more oil reserves. Moreover, the arrangements for China’s oil imports and the sales system for oil and gas products also enable China to mitigate the impact of the rapid rise in international oil prices on domestic oil prices. “For China, the impact of (international oil price increases) is also relatively small.”

On March 23, the National Development and Reform Commission released a notice. To mitigate the impact of abnormal international oil price increases, reduce the burden on downstream users, and ensure stable economic operation and people’s wellbeing, based on maintaining the current price mechanism framework, it adopted temporary control measures for domestic refined oil prices. The announcement stated that, calculated according to the existing price mechanism, starting from 24:00 on March 23, domestic gasoline and diesel prices (standard grade) were to be increased by 2205 yuan and 2120 yuan per ton respectively. After the adjustment, the effective increases were 1160 yuan and 1115 yuan.

“Of course, after energy prices rise, they may also further produce adverse effects through trade channels, causing negative impacts on economic growth in each country,” Lin Yifu added. “That is also why, in the 1970s, due to two waves of high oil prices, the world economy fell into recession.”

In an article published recently, the Quincy Institute for Responsible Statecraft, a well-known U.S. think tank, said that although China is still the world’s largest importer of oil and natural gas, China’s diversified energy import channels and its leading position in the field of green energy mean that when facing the crisis of a disruption in the Strait of Hormuz, to a certain extent it can “be unaffected.”

When answering questions from other media, Lin Yifu also expressed a similar viewpoint. He said that, in the face of the challenge of global energy price increases brought about by the current geopolitical conflict, China’s rapid progress in the new energy sector has turned this challenge into China’s advantage. On the one hand, China is developing new energy to address global warming, reduce reliance on fossil energy, and shift to green energy. On the other hand, China’s high production capacity also makes new energy products a new growth point for China’s economy.

The latest released “Statistical Communiqué on China’s National Economic and Social Development for 2025” shows that by the end of 2025, the country’s nationwide installed power generation capacity was nearly 3.9 billion kilowatts. Among them, the combined installed capacity of wind power and solar power has already exceeded 1.8 billion kilowatts, surpassing coal power installed capacity for the first time. The share of non-fossil energy consumption has historically surpassed oil; China’s energy consumption structure has basically formed a new pattern of “four-way alignment” between coal, oil, gas, and non-fossil energy. In the first four years of the “14th Five-Year Plan,” 84% of newly added installed power generation capacity in China came from non-fossil energy, and nearly 60% of newly added electricity generation came from non-fossil energy.

Besides the energy sector, the situation in the Middle East has remained tense, especially with the closure of the Strait of Hormuz, which has also affected other economic areas. In addition to crude oil, liquefied natural gas, and oil and gas products, the Strait of Hormuz also handles the transportation of 32% of the world’s helium supply, 45% of sulfur exports, 50% of the diammonium phosphate trade, 30% of naphtha, 33% of urea, as well as transport of key commodities such as aluminum, methanol, and polyethylene. Affected by the strait’s closure, in recent days, prices of global bulk commodities such as fertilizers and metals have also risen rapidly. On March 21, Russia, one of the world’s largest fertilizer-producing countries, announced it would suspend exports of ammonium nitrate for one month. According to The Straits Times, China also took related measures in mid-March to further tighten fertilizer exports.

In response, Liu Yue said, “When a fire spreads across the whole world, no country can stay unaffected and act independently.” She said that the war in the Middle East not only affects energy prices, but also affects the prices of materials such as fertilizers, which in turn affects the prices of food and other products. “This will affect the policies of China, Russia, and any other country.”

Liu Yue said that before helping other countries get through difficult times, each country “must first protect itself.” “We hope the crisis in the Middle East can end as soon as possible, and we will also strive to upgrade our supply chain,” she said. “If the current conflict unfortunately evolves into a long-term crisis, China will also work to build a more robust supply chain to support the supply of goods on the other side of the Earth.”

The “Lin Jia 7th Salon” is hosted by the China Public Diplomacy Association. Regarding related topics, it invites guests to interact with Chinese and foreign reporters from time to time, providing a platform and window for exchanging viewpoints to understand China’s policies.