How Trump's Iran approach is quietly fueling China's rise — Fareed’s Take

[0:00] Here's my take. [0:01] Something puzzling is happening on the world stage. [0:04] The United States has been infuriating much of the world [0:07] by being reckless, erratic, and lawless, [0:10] launching unilateral military actions, [0:12] roiling the global economy, upending alliances, [0:15] and treating long-held norms as inconveniences. [0:20] And yet China, the world's rising superpower, [0:23] has not piled on with thunderous denunciations [0:26] and proclaimed itself the responsible alternative [0:29] to an unreliable America. [0:32] Understanding why will help us better grasp Beijing's long game. [0:38] I spent the last week in China [0:39] and was struck by how many people there [0:41] felt differently about this latest American war [0:45] in the Middle East compared to the last major one. [0:48] During the Iraq war, [0:50] Chinese strategists seemed almost gleeful [0:52] at the spectacle of America mired in the desert. [0:56] This time, officials, think tank scholars, [0:58] and business leaders were mostly bewildered [1:01] by America's chaotic policy, [1:04] worried about it, [1:05] and deeply uncertain about what Trump might do next. [1:09] Some of this is self-interest. [1:11] China needs the oil and gas [1:13] that pass through the Strait of Hormuz. [1:15] More broadly, the country is not a rogue state like Russia. [1:19] It understands that its growth depends on open sea lanes, [1:23] functioning markets, and steady rules of the game. [1:27] Chinese officials repeatedly told me, [1:29] echoing Xi Jinping, [1:31] that the United States was taking the world back [1:33] to the law of the jungle. [1:36] It's less a moral critique than a strategic anxiety. [1:39] In a globalized world, [1:40] when the reigning hegemon becomes utterly unpredictable, [1:44] it's bad for everyone. [1:47] Chinese officials claim their country [1:48] does not want to replace the United States. [1:51] Its business leaders insisted [1:53] that America remains the more innovative economy. [1:56] Even though America has soured on China, [1:59] those leaders continue to admire Silicon Valley, [2:02] America's great universities, [2:04] and the scale and sophistication of the U.S. market. [2:08] China's strategy is to use this crisis [2:10] to build its economic strength and global influence. [2:15] China is doubling down on the frontier technologies [2:18] that it believes will define the next era of growth, [2:21] green energy, robotics, artificial intelligence [2:24] applied to real industries, [2:27] advanced manufacturing, and services. [2:30] Its dominance in some of these sectors [2:32] is already staggering. [2:34] It produces 80% of the world's solar panels, [2:38] about 60% of the wind turbines, [2:41] and 75% of the batteries. [2:43] It supplies 70% of all electric vehicles on the planet. [2:48] China has used the last three economic shocks [2:52] to further its dominance. [2:55] During the pandemic, [2:56] Chinese firms surged to supply much of the world [2:59] with medical equipment. [3:01] As the artificial intelligence boom swelled, [3:04] China became central to its physical build-out. [3:07] The metals, electrical equipment, [3:09] batteries, cooling systems, [3:11] and industrial components needed for data centers. [3:14] Now the Iran war has produced a global scramble [3:18] for new energy. [3:20] Here again, China is the indispensable power. [3:23] It dominates the green technologies, [3:25] solar, wind, batteries, electric vehicles [3:28] that countries will need [3:29] to reduce dependence on imported oil and gas. [3:34] Beijing turns these industrial strengths into influence. [3:38] It offers financing, infrastructure, and supply chains. [3:41] It locks countries into Chinese-made systems. [3:44] It shows governments that America brings volatility, [3:48] while China brings equipment, credit, and continuity. [3:51] From 2000 to 2025, [3:54] Beijing financed projects and ports [3:56] in 90 countries around the world. [3:59] Last month, Beijing even offered Taiwan a deal of sorts. [4:04] Accept peaceful reunification, [4:07] and the mainland will guarantee your energy security. [4:12] China's next expansion of influence is crucial. [4:14] Xi recently made explicit Beijing's ambition [4:17] to turn the renminbi into a global reserve currency. [4:22] One former official explained how China [4:24] would steadily expand its bond market [4:26] and financial infrastructure [4:28] so that if investors came to see America as risky, [4:32] they would have an alternative. [4:35] Recent weeks have brought an obscure but ominous sign. [4:38] Institutions like the World Bank [4:41] and the European Investment Bank [4:42] have been able to issue debt [4:44] at rates essentially as low [4:47] as those offered by U.S. treasuries. [4:51] This threatens to end what has been called [4:53] America's exorbitant privilege [4:55] of having the world's reserve currency. [4:58] If that erodes, [5:00] America will get a very painful shock [5:02] when its government and its households [5:04] can no longer borrow so much so cheaply. [5:07] China is using this moment to burnish its reputation [5:12] but mostly to build its power. [5:15] If the correlation of forces moves steadily in its favor, [5:19] if America continues to squander its global influence, [5:23] one day Beijing might decide [5:25] that after all, [5:27] it does want to take on the mantle [5:28] of the world's leading power. [5:31] And at that point, [5:32] it will be too late for Washington [5:34] to do anything about it. [5:36] On Friday, Iran announced [5:38] it was reopening the Strait of Hormuz. [5:40] But on Saturday, [5:41] it said the Strait was closing again [5:43] due to breaches of trust by the United States. [5:46] Just hours ago, [5:47] President Trump responded with fury [5:49] on his Truth Social account, [5:51] calling it a total violation [5:53] of our ceasefire agreement. [5:55] He also said that a U.S. delegation [5:56] will be in Pakistan tomorrow evening [5:58] for a second round of negotiations [6:00] and said that if Iran does not accept a deal, [6:03] then the United States is going to knock out [6:05] every single power plant [6:06] and every single bridge in Iran. [6:09] Now there are only three days left [6:10] before the U.S.-Iran ceasefire is set to end. [6:15] And Iran's top negotiator says [6:16] the U.S. and Iran are still far from a final agreement. [6:20] Joining me now is Vali Nasser. [6:21] He is a professor of international affairs [6:24] and Middle Eastern studies [6:25] at Johns Hopkins University [6:27] and has author of an important book, [6:30] The Grand Strategy of Iran, [6:32] which in many ways, [6:34] I would argue, [6:35] predicts a lot about what has happened. [6:38] Why is Iran being so intransigent [6:41] in the face of these extraordinary threats [6:44] that Trump has made? [6:47] I mean, first of all, [6:48] Iran thinks that through the 40 days war, [6:50] they did make some strategic gains [6:52] that they want to consolidate. [6:53] And they also think that [6:55] they can actually get a final deal [6:57] with President Trump [6:58] if they stand their ground. [7:01] But the most important thing here [7:03] is an issue of trust. [7:04] I think in Islamabad, [7:06] the opportunity was for the two sides [7:08] to build trust [7:09] that then would allow them [7:11] to resolve things. [7:12] But after the talks ended, [7:14] I think trust has actually collapsed [7:15] even further [7:16] between Iran saying [7:18] it would open the straits, [7:20] the United States not lifting the blockade. [7:24] And then President Trump [7:25] issuing a series of tweets [7:26] that the Iranians say were false [7:28] and portrays an image [7:30] like Iran has already surrendered [7:32] even before there's a final deal. [7:34] So I think what we see [7:36] as Iranian intransigence [7:38] is also Iran's deep distrust [7:40] that this is all a ruse, [7:42] that like what had happened in Geneva, [7:44] the U.S. is setting them up [7:46] for something bigger to come. [7:47] The Geneva point is important [7:49] because my understanding [7:50] is the Iranians thought [7:51] they were negotiating [7:52] in good faith in Geneva [7:53] and in the middle of it, [7:56] Trump starts the war. [7:57] And so there is specifically [7:59] a lot of lack of trust [8:00] with the two negotiators, [8:03] Witkoff and Kushner, correct? [8:04] Yes, those two in particular, [8:06] and especially in Geneva [8:08] the last round [8:09] because Iran did put forward [8:10] very new things [8:12] that it hadn't done before. [8:13] It went much farther [8:14] than it had gone before. [8:16] And what it got instead [8:17] was bombing. [8:18] In other words, [8:19] it's not like the U.S. said, [8:20] okay, these are great concessions. [8:22] I want you to concede even more [8:24] and I'm going to be tougher [8:25] until you concede. [8:26] He just went straight to war. [8:28] And he had done this once before [8:29] when a war happened in June. [8:31] They were also in the middle [8:32] of negotiations. [8:33] With Witkoff and Kushner. [8:34] With Witkoff and Kushner. [8:36] So the Iranians [8:36] are extremely suspicious [8:37] that maybe this whole [8:39] Islamabad exercise [8:41] is theater [8:42] as the United States [8:43] build its forces [8:44] in the region, [8:45] sort of learns the lessons [8:47] of the first 40 days, [8:48] and Trump may go back [8:49] to war again. [8:50] So, and also this whole talk [8:53] about Iran has made concessions [8:54] is a way of actually [8:56] creating confusion in Tehran [8:58] and breaking ranks [8:59] within Iran. [9:01] My own view on that [9:01] is that Trump [9:02] is just talking down [9:03] the stock market. [9:04] He knows that [9:05] every time he says things like, [9:07] we're close to a deal, [9:08] they've surrendered, [9:09] the stock market [9:10] doesn't collapse, [9:11] which is one of his goals. [9:14] Is there new leadership [9:15] in Iran? [9:16] And how to think [9:17] about that issue [9:17] of these new people? [9:20] Are they divided? [9:21] Are they, you know, [9:22] are they more hardline? [9:24] There is a, [9:25] I believe there is [9:26] a cohesive leadership. [9:28] In other words, [9:28] the top four or five people [9:30] are all, [9:30] have known each other, [9:32] have worked together, [9:33] are from the same ilk [9:34] in Iran. [9:35] They are all [9:36] Mojtaba Khamenei's people, [9:38] and he included. [9:39] So it's not like [9:40] you have a coalition [9:41] at the top. [9:42] You have the same ilk there. [9:43] They're much more hawkish [9:44] leaders in Iran. [9:46] They are not restrained [9:47] in waging aggressive war, [9:49] but they've also shown [9:50] that they can, [9:51] they are willing [9:51] to lean into negotiations [9:53] and diplomacy as well. [9:54] What does [9:55] a more hardline mean? [9:57] Means that [9:57] they are willing [9:58] to take actions [10:00] that perhaps [10:00] the previous supreme leader [10:01] was not willing to take. [10:03] For instance, [10:04] attacking Iran's neighbors [10:05] in the way they have done. [10:07] Be willing to escalate [10:09] with the United States, [10:10] and as one of the advisors [10:12] to Mojtaba Khamenei said, [10:13] it's not an eye for an eye, [10:15] it's an eye, [10:16] a head, [10:16] a hand, [10:17] a neck. [10:17] You know, [10:18] we sort of, [10:18] if you provoke, [10:20] we'll provoke even further. [10:22] And so this is [10:22] a very different approach [10:23] than the previous supreme leader [10:25] who responded [10:25] to an American attack [10:26] on Iran's nuclear facilities [10:28] with a symbolic [10:29] sending of missiles [10:30] into Qatar. [10:32] But at the same time, [10:33] I think they've been [10:33] willing to go further [10:35] than perhaps [10:35] the previous supreme leader [10:37] was willing to go [10:38] in terms of negotiating [10:39] with the U.S. [10:41] But domestically, [10:42] you know, [10:42] the factions in Iran [10:43] are still the same. [10:44] The regime still has [10:45] to manage its base, [10:47] has to manage [10:48] public opinion in Iran. [10:49] It has asked Iranians, [10:50] in particular, [10:51] its own people [10:52] to sacrifice enormously [10:53] for this war. [10:55] So when President Trump says, [10:56] oh, Iran has already [10:57] given up everything [10:58] even before there's [10:59] a signature, [11:00] it actually creates [11:01] a crisis for them [11:02] about how do they manage [11:04] perceptions within Iran, [11:05] which is quite significant. [11:07] So when we talk to [11:08] the U.S. [11:09] and the U.S. [11:10] and the U.S. [11:11] and the U.S. [11:11] and the U.S. [11:12] and the U.S.