Six weeks into the U.S.–Iran conflict, China’s supply chains are buckling. Early in the war Beijing seemed insulated, but March recorded the first year‑on‑year rise in factory gate prices since 2022. With roughly a third of oil and a quarter of gas sourced from the region, the Hormuz choke point now looms large, reviving fears of a Covid‑19‑like shock.

Raw material costs have exploded: polyethylene prices doubled, while carbon‑fiber feedstocks jumped 20 %. Helium, essential for semiconductors and medical gear, surged 110 % for high‑grade grades and 65 % for lower grades since the attacks began. Small manufacturers from Wenzhou to Yiwu report order cuts and price hikes, tightening profit margins across the value chain. Exporters warn that rising costs could erode China’s competitive edge.

Beijing has responded with temporary bans on diesel, jet fuel and select fertilizers, and officials like former NDRC deputy Peng Shaozong urge releasing strategic oil reserves and diversifying supply. President Xi called for accelerated renewable and nuclear projects to shore up energy security. The immediate impact is higher input costs and strained exports, pressuring both domestic producers and overseas buyers.