How China Can Strangle The World
Over the weekend an editorial in an Iranian newspaper funded by the Iranian Supreme Leader Ayatollah Khamenei suggested that Iran close the Strait of Hormuz to South Korean vessels until Seoul releases $7 billion in frozen funds.
"We can and must close the Strait of Hormuz to South Korean cargo ships and oil tankers and all ships that carry South Korean commodities … and not allow them to navigate through the Hormuz Strait as long as they have not paid their $7 billion debt to our country," Hossein Shariatmadari, the chief editor of Kayhan, wrote in an editorial entitled “Let’s Begin Imposing Sanctions on South Korea”.
To the casual observer, this statement may simply seem like another in an endless stream of Iranian pronouncements. This is what the ayatollahs do. They rant and rave.
Unfortunately, this is much more serious than that, and it has perhaps as much to do with Beijing as Tehran.
The United States is seemingly devoid of any coherent geopolitical strategy. Our focus vis-a-vis the Chinese seems to be on how much money certain American billionaires can make in the short term from doing business with a corrupt, totalitarian Chinese regime. The Chinese Communist Party (CCP) has no such myopic view. It is thinking long-term with the goal of succeeding where the Soviets failed.
Beijing wants to dominate the planet, and one of the keys to doing that is controlling the flow of energy and trade.
Well over a decade ago the CCP began an aggressive island-building campaign in the South China Sea, one of the world’s most strategic waterways. Unimpeded by the United States or its allies, Beijing has now completed the construction of these artificial islands and fully militarized them. The CCP can effectively shut off the flow of trade through the South China Sea anytime it wants.
More than 60% of global maritime trade and more than 22% of total global trade pass through the South China Sea every year. One-third of global shipping transits this body of water. That includes 40% of all the world’s petroleum products. At least ten different nations are effectively completely dependent on trade transiting the South China Sea.
This action alone puts China in an enviable strategic position, but the CCP is moving aggressively elsewhere as well. Much of the world’s oil comes from the Middle East. The lion’s share of that transits the Strait of Hormuz.
The Strait of Hormuz is the world's most important oil chokepoint, because of the large volumes of oil that flow through the strait. Roughly one-third of all the world’s oil transits this narrow body of water. There are very few options for moving oil out of the Middle East if the Strait is closed.
Why simply throttle the flow of oil through the South China Sea? Why not grab the world by the throat and acquire the ability to cut off oil at its source?
That is exactly what the Chinese – via their Iranian allies – are doing.
In March 2021 Beijing and Tehran signed a 25-year strategic partnership. China is investing billions in Iran. The two nations also now conduct joint military exercises, share intelligence and collaborate in weapons development. There are reports of the deployment of as many as 5000 Chinese troops to Iran. China already has access to port facilities in Iran, and as part of the new strategic partnership there are reports it will build its own base as well.
With its moves in the South China Sea and the Strait of Hormuz and via its new alliance with Tehran Beijing has put itself in a position to strangle the world’s economy anytime it wants. Even that does not fully capture the peril we are in, however. Joe Biden’s war on American oil and gas and his mad scramble to force feed Americans a new “green” economy will only make the situation worse.
This entire new economy will be completely dependent on the supply of rare earth minerals and other “exotic” materials. The Chinese already control the flow of virtually all of these. They can anytime they choose simply cut off the supply of things like lithium and bring all the world’s electric cars and windmills to a stop. In effect, the greener we become the more hostage to Beijing we are.
The only real protection we had against any of this was the production of American natural gas and oil. As long as we were energy independent, as we were briefly under Donald Trump, we retained the capacity to shut off the export of energy, husband our supplies, ramp up production and defy any Chinese attempts to crush us economically.
We have surrendered that capability. We have handed the Chinese the keys to our destruction.
In this context, loud threats from China’s ally Iran against our ally South Korea ought to be viewed as something much more than a demand for cash from corrupt clerics and their cronies. It ought to be viewed as the first test of China’s newly acquired ability to strangle the world.