China’s largest trade show is now under way in the southern city of Guangzhou. The Canton Fair is a colossal month-long affair with around 32,000 exhibitors and is often described as a shop window for Chinese manufacturers – a barometer of the China trade – where just about anything and everything can be bought. This year the mood is subdued. ‘The spectre of the Iran war hung heavy like the banners inside the gigantic exhibition halls,’ as Bloomberg described it.

Exhibitors reportedly complained of soaring costs and falling orders, most notably from the Middle East. China’s economy is highly dependent on exports, and the show’s opening coincided with President Xi Jinping’s first public remarks about the war, complaining to visiting Spanish prime minister Pedro Sánchez that the international order is ‘crumbling into disarray’.

Yet Xi has been preparing for a moment like this ever since he came to power in 2012. In many ways China is in a better position than most to weather the storm – at least in the short term. The country is estimated to hold the world’s largest reserves of oil – around 1.3 billion barrels, roughly equivalent to three months of imports – prompting US Treasury Secretary Scott Bessent last week to accuse China of hoarding oil supplies. At the same time it is investing heavily to extract oil from what remains of its own fields, as well as in fracking and nuclear capacity. It continues to dig coal and build coal-fired power stations at a faster rate than the rest of the world combined.

Chinese analysts think that China’s best strategy is to let Trump dig himself into an ever-deeper hole

Chinese........

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