Chinese Equities Hold Up Better Than U.S. Markets Amid Middle East Crisis
Intermarket analysis shows that Chinese equities have managed to withstand the shock of the Middle East crisis better than U.S. equities. This is not a coincidence—behind the numbers in the relative strength ratio lie structural changes that have developed over the past decade.
In the language of financial markets, China has traditionally been classified among the economies most vulnerable to oil shocks. The country imports more than 70% of the crude oil it consumes, with roughly one third of those supplies passing through the Strait of Hormuz—declared closed by Iran since March 2. Yet during the two most turbulent weeks for energy markets since the 1973 crisis, Chinese equities did something unexpected: they held up.
While the S&P 500 absorbed the impact of geopolitical volatility, the Shanghai Composite declined far less sharply. The yuan remained stable against the dollar, and Chinese government bond yields moved only marginally.
China’s resilience is not accidental. It is the result of strategic decisions developed over the course of a decade.
Strategic reserves. Beijing has accumulated roughly 1.4 billion barrels of oil across its strategic and commercial reserves—more than three times the U.S. reserves. According to estimates from Macquarie, this buffer provides around six months of autonomy even in a scenario of a complete disruption of Middle Eastern supplies. In the short term, the impact is limited and can be absorbed.
Energy transition. For years China has invested heavily in renewables and electric vehicles, achieving a dominant position along the entire clean-energy value chain. The result is an economy still dependent on imported fossil fuels, but less subordinate to them than in the past. Larry Hu of Macquarie estimates that even with oil at $100 per barrel, Chinese consumer inflation would rise only to about 1%.
Supply diversification. China has systematically diversified its crude oil suppliers, reducing its dependence on the Persian Gulf. According to Kpler data, millions of barrels of Iranian, Russian, and Venezuelan oil—bypassing sanctions—are currently sitting on tankers off China’s coasts. A shadow fleet that is now revealing itself as a strategic asset.
Domestic context. The “Two Sessions”—the annual meetings of the National People’s Congress—took place precisely in the first weeks of March, creating an institutional environment that traditionally favors market stability. The 15th Five-Year Plan, presented on this occasion, confirmed the strategic priority of technological self-sufficiency and economic resilience.
The SPY/CNYA ratio analysis captures with precision the regime shift currently underway. The indicator measuring the relative strength of U.S. equities versus Chinese equities shows that China is significantly outperforming the United States.
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Analysis based on data as of March 11, 2026. Data based on correlations of daily percentage returns, comparing the last 30 days with the previous 252 days.
