Decoding China: How Beijing deals with the Houthis

China had long tried to come to terms with the Houthi rebel group. But Beijing is now apparently losing patience with the Iran-backed Shiite Muslim militia, which has fought a civil war in Yemen since 2014 and controls large swaths of the conflict-ridden country.

The Houthis have been launching attacks on cargo ships affiliated with Israel in the Red Sea over the past few weeks.

Chinese officials have asked their Iranian counterparts to help rein in attacks on ships in the crucial waterway, or risk harming business ties with Beijing, Reuters reported, citing Iranian sources.

"Basically, China says: 'If our interests are harmed in any way, it will impact our business with Tehran. So tell the Houthis to show restraint,'" one Iranian official briefed on the talks, who asked not to be named, told the news agency.

China calls for safe passage for ships

In a speech at the World Economic Forum in Davos last week, Chinese Premier Li Qiang emphasized the need to keep global supply chains "stable and smooth," without referring specifically to the Red Sea.

Beijing has also appealed to the Houthis to stop attacking merchant ships.

"We call for an end to the harassment of civilian vessels, in order to maintain the smooth flow of global production and supply chains and the international trade order," said Foreign Ministry spokesperson Mao Ning.

She added that the top priority was to end the war in Gaza as quickly as possible in order to prevent it from spreading or even getting out of control.

The Commerce Ministry in Beijing has also called on actors in the region to "restore and ensure the safety of waterways in the Red Sea."

China has so far refrained from any military involvement against the Houthis, unlike the US and the UK, which have launched airstrikes against the group.

The Houthis have also said Russian and Chinese ships transiting the Red Sea will be granted safe passage. It justified the move by saying that ships from China and Russia are not involved in delivering supplies to Israel.

However, even if Chinese ships are not directly affected, the Houthi attacks pose a big challenge to Beijing's interests. A huge chunk of Chinese exports is handled by foreign ships, and also around 60% of all Chinese exports to Europe pass through the Red Sea and the Suez Canal, according to the Middle East Institute think tank.

The volatile security situation in the region has already forced several shipping firms to divert away from the Red Sea and take the longer and more expensive route around the Cape of Good Hope in South Africa, exacerbating global supply chain problems.

Houthi attacks having huge economic impact

The Houthi actions have an enormous economic impact on China, said Johann Fuhrmann, head of the Konrad Adenauer Foundation's office in Beijing.

"In terms of supply chains and global trade, Beijing is facing enormous challenges. Not only is the route around the Cape of Good Hope longer and more expensive, it is also rapidly increasing container prices," he told DW.

"All of this comes at a time when China is focusing heavily on boosting exports — as the real estate crisis in the country has shown that property-based economic boom is no longer going to happen," Fuhrmann added.

Nora Kürzdörfer, China expert at the German Institute for Global and Area Studies in Hamburg, also pointed to China's high reliance on energy supplies from the Middle East and Africa.

"Despite the fact that Chinese ships have not yet been attacked, Chinese exporters are facing increased transportation costs and insurance premiums."

According to several estimates, the cost of shipping a container to Europe has more than doubled, to around $7,000 (€6,443), since the Houthis began attacking cargo ships in December.

Beijing shows political restraint

Still, China has so far exercised political and military restraint, to avoid jeopardizing its economic and diplomatic interests in the region.

Beijing has traditionally pursued a policy of non-interference and emphasized national sovereignty, said Kürzdörfer. But this doesn't mean that China isn't pursuing its political interests, she added.

Beijing, for instance, is using the current situation to highlight that the US shares responsibility for the prevailing instability, Kürzdörfer noted. "It is also strengthening partnerships with local partners and allies such as Iran."

Furhmann said Beijing's political aim, in general, is to establish itself as a new power in the region, as demonstrated last year when China mediated a rapprochement between the two major rivals in the Middle East, Saudi Arabia and Iran.

At the same time, the Chinese government has repeatedly emphasized the sovereignty of other states and presented itself as a force for peace, he stressed.

"Beijing has said the military intervention of the US and its allies is destabilizing not only in Yemen, but in the entire region."

In general, China sees itself as an advocate for the Global South, Furhmann said. "The expressed solidarity with the Palestinians is also in line with this."

At the end of November, the Chinese government unveiled a policy paper on the war in Gaza, in which it called for a "comprehensive cease-fire and an end to the fighting," "effective protection of civilians" and humanitarian aid for the people in tiny coastal enclave.

The paper didn't mention the terror attacks carried out by Hamas in Israel on October 7, where around 1,200 people, mostly civilians, were killed and over 200 people taken hostage.

Hamas is designated as a terrorist organization by Germany, the US, the EU and some other countries, but not China.

Concerns about being too close to the US

"In this respect, it is remarkable that Israel generally has good relations with China, but is also perceived there as an ally of the US," said Fuhrmann.

Kürzdörfer shares a similar view. "While China maintains its trade relations with Israel, it tends to side with the Palestinians rhetorically and diplomatically, also to act as a counterweight to the US," she said.

However, practical considerations also play a role for Beijing, she added. "China is also arguing for a quick end to the war in Gaza in order to avoid a further escalation of the situation in the Red Sea."

Fuhrmann said Beijing has comparatively little operational military experience abroad, which is probably one of the reasons why it is being cautious.

"Instead, it prefers to watch other states from the sidelines during their military engagements and then criticize them. However, it remains to be seen whether this calculation will hold up in the long term."

"Decoding China" is a DW series that examines Chinese positions and arguments on current international issues from a critical German and European perspective.