China is feeling the economic strain of the war with Iran. It is particularly acute for Beijing and the CCP. According to the Financial Times, China’s supply chains are beginning to show signs of acute strain as the US war in Iran tests the limits of President Xi Jinping’s years-long effort to prepare his nation for external shocks.
In March, China recorded its first year-on-year increase in factory-gate prices since 2022.
Cameron Johnson, a senior partner at Shanghai supply chain consultancy Tidalwave Solutions, warned that the supply disruptions could be “worse” than during the Covid-19 pandemic. He said that prices in China had doubled for some polyethylenes, disrupting the market for materials needed to make everything from plastic bags and bottles to clothing and toys.
Prices for some carbon fibers, which rely on some feedstocks from the Middle East and are widely used across the auto and consumer goods industries, had risen 20 percent. He added, “It’s all the raw inputs — particularly anything that might be imported or where there’s already a tight supply,” Johnson said. “It’s scarcity, it’s supply tightness, it’s a lack of visibility when things will be turned back on.”