China has policy room to absorb Middle East conflict shock if war ends soon, adviser says

A Chinese central bank adviser has warned that imported inflation, stemming from rising global oil prices due to ongoing Middle East conflict, poses a significant threat to China economy. The adviser, however, suggested that Beijing maintains sufficient "policy room" to absorb these shocks, provided the regional conflict resolves quickly, mitigating long-term inflationary pressures. This concern arises because China, as a major net oil importer, is highly susceptible to global energy price fluctuations, which directly translate into higher costs for businesses and consumers, eroding corporate profitability and dampening domestic demand in its real economy. The "policy room" refers to the Chinese central bank capacity to deploy monetary and fiscal tools—such as adjusting interest rates, reserve requirements, or government spending—to counteract these inflationary pressures and support economic growth, though prolonged conflict could exhaust these options and lead to more difficult trade-offs.