‘Demand shock’: China cannot escape the impact of a long Iran war, analyst warns

While China appears better prepared than other countries to deal with the shocks brought by the US-Israel war on Iran, its economy would still come under pressure in the short term if its regional partners suffer, an executive with a global consultancy has said.“China might be more resilient, but China is not resilient to a demand shock,” said Denis Depoux, a global managing director at consultancy Roland Berger.“For example, if the economy is slowing down in Southeast Asia, if people stop using their cars because the government is asking them to work from home or they cannot afford to buy gasoline, then it would have an impact on Chinese refiners,” he said on Wednesday, on the sidelines of the Boao Forum for Asia.The Association of Southeast Asian Nations is China’s biggest trading partner. As the region’s consumer and industrial demand grows, Chinese companies are meeting much of that need – leveraging both direct exports and a growing network of manufacturing footholds across Indonesia, Vietnam, Cambodia and Thailand, Depoux said.“So the short-term impact [of the war] can be big, and can also lead to a financial crisis not necessarily in China, but indirectly affecting China,” he said.But the conflict has not stopped Chinese companies from continuing to expand into overseas markets – including in the Middle East – with firms’ “super pragmatic adaptation” of supply chains creating buffers, according to Depoux.