Iran war strains China, sparks row

China’s factories are getting squeezed by the Iran war just as Beijing is trying to keep growth on track. Exporters at the Canton Fair said orders are slowing and input costs are rising. (usnews.com) At the April 15-19 Canton Fair in Guangzhou, plastics maker Shao Haixia said raw-material costs had jumped 20% since the war began and her profit margin had been cut roughly in half to 5% to 6%. Reuters reported that 32,000 companies are exhibiting at the fair. (usnews.com) Another exhibitor, appliance maker Weking, said output had been halved by weaker orders and higher prices for plastic, copper and aluminum, even after it raised prices 15%. Its general manager said the next step would be job cuts if the fighting continues. (usnews.com) The timing is awkward for Beijing because official data showed China’s economy grew 5.0% year over year in the first quarter of 2026, after growth slowed to 4.5% in the last quarter of 2025. The National Bureau of Statistics said first-quarter gross domestic product rose 1.3% from the previous quarter. (stats.gov.cn) That early-year rebound was still powered by manufacturing and exports. China’s official manufacturing purchasing managers’ index rose to 50.4 in March from 49.0 in February, moving back above the 50 line that separates expansion from contraction. (stats.gov.cn) The war is now feeding through prices as well. China’s factory-gate producer price index rose 0.5% in March from a year earlier, the first increase since September 2022, as higher oil and commodity prices pushed up costs. (cnbc.com) Shipping and energy are part of the pressure. Bloomberg reported that the Strait of Hormuz remains effectively closed for maritime traffic, and that disruption has constrained supplies and pushed up oil and gas prices for major importers including China. (bloomberg.com, bloomberg.com) The economic strain is colliding with a new political fight between Washington and Beijing. On April 21, President Donald Trump said the United States had caught a vessel carrying a Chinese “gift” for Iran, suggesting it may have been weapons or other lethal supplies. (bloomberg.com) Trump had already threatened a 50% tariff on imports from any country supplying Iran with military weapons, saying on April 8 that the duty would take effect “immediately” and come with no exemptions. Reuters said the warning was aimed at deterring countries including China and Russia from restocking Tehran’s arsenal. (usnews.com) Beijing has denied the accusations. China’s foreign ministry has blamed the shipping disruption in the Strait of Hormuz on U.S.-Israeli military action against Iran, while Chinese officials have separately denied reports of recent military support to Tehran. (fmprc.gov.cn, usnews.com) That leaves China facing two linked risks at once: a war-driven hit to costs and demand, and a U.S. threat to turn Iran-related security claims into new trade penalties. For exporters already re-quoting contracts in Guangzhou, both pressures are landing now. (usnews.com, bloomberg.com)