As the US-Israel war on Iran enters its sixth month, Chinese policymakers face critical questions about the conflict's duration and its potential impact on China's economic plans. Mao Zhenhua, co-director of Renmin University’s Institute of Economic Research and professor at the University of Hong Kong’s Business School, said the war's impact on China has so far been "small," but it could still influence Beijing's macroeconomic management.

Speaking recently in Hong Kong, Mao highlighted that while the war causes global spillover effects, China is likely experiencing the smallest impact compared to other major economies. Despite a slowdown in China's economic growth in the second quarter of 2026, Mao emphasized the country's resilience and capacity to manage further challenges, having withstood the initial shocks of the conflict better than many others.

Mao also stressed that Beijing is not taking the situation lightly. "For the remainder of the year, Beijing will give more weight to countering upheavals and stopping external factors from complicating the situation at home," he said. The ongoing conflict could push Chinese policymakers to address existing internal economic issues more effectively.

Sources