It is more complicated, Iran being China's greatest ally in the region just isn't true. Iran for example has not committed to giving China favorable trade/military export deals. In 2024, even Israel has achieved majority Chinese autos sales, while Iran still hasn't.News event: Russia has warned against strikes on Iran's nuclear infrastructure as China called for diplomatic efforts after US President Donald Trump threatened to bomb the country if Tehran did not come to an agreement over its nuclear program.
So what is China doing to prevent Iran from falling, other than buying oil? After all, Iran is China's most reliable ally in the Middle East. Furthermore, the Gaza genocide has exposed the evil of the U.S./Israeli war machine and created a great demand in many countries around the world who want to see it resisted, but are too cowardly to do it themselves.
In the past week, Trump has completely decoupled the U.S. economy from China. He has imposed tariff rates of 50-70%, far higher than any other country. He has closed off routes that Chinese companies used to use to get around tariffs, via Southeast Asia and Mexico. And a leaked Pentagon war plan has shown that the U.S. military has put the highest priority on going to war with China. China has no reason to hold back anymore to preserve their relationship with the U.S., a country whose elites are preparing for a hot war with China.
No matter what the U.S. does, the ultimate target is China. So when the U.S. is targeting Iran, it is ultimately targeting China. It aims to first solve its Iran problem, and then its Russia problem, so that it can tackle China. This was true with sanctions as well! Iran was the canary in the coalmine when the U.S. started threatening banks against doing business with Iran in the 2000s, and then passed CISADA under Obama in 2010, introducing blocking sanctions and the SDN list against state actors. That was a template for sanctions against China starting in the late 2010s. It will be the same for war. First, they will take down the smaller guy (Iran), then they will go for the boss (China).
As far as the Palestinians, there is nothing that China could do to increase its soft power and goodwill in the world than to more visibly help them, even if other Muslim countries and neighbors refuse. The other Muslim countries want to help, but they refuse rationally, because the U.S. is not dead set against them yet. The U.S. is willing to have them as client states. The same is not true of China. China has already been declared an enemy of the U.S. by bipartisan consensus, just like Iran and the Palestinians. Do not underestimate the power of goodwill in this arena. No matter what laws or sanctions the U.S. government takes, it still requires thousands of private businesses and millions of private individuals globally to cooperate. If the world sees China supporting the Palestinians, who are unquestionably being genocided by the U.S. and Israel, it will be impossible for the U.S. to win hearts and minds against China.
So in my analysis, China cannot allow the Islamic Republic of Iran to fall any more than Russia, and it should take a more active role in providing material support to the Palestinians, even at the risk of pushing Israel away or further alienating the Israeli lobby in Washington. Whether its leaders will be able to perceive and react to the changing situation in time is the issue.
Besides a security and economy pact with Iran, China also has one with Saudi. And Saudi unlike Iran can promote oil sales using Chinese currency into the west. Other than that, China also gains intel from Israel, which is positioned closely to US without being loyal to US.
In that sense, China has important interests in all 3 powers in the middle east and unless there is an amazing deal, would not necessarily quickly side with one of them.
But either way I don't see US attacking Iran as it will destroy America's chance to compete with China. An illegal invasion in the middle east coupled with an already plunging economy at home will not just stick a ton of US forces into a quagmire they can't leave (thus leaving Asia completely open). It would affect US' ability to retain overseas assets and affect domestic stability.
To be honest, you can't actively go to war (without disastrous consequence) when your country is divided in opinion and you're in the midst of purges. The risk for US is that they will get randomly militarily jumped by China if China feels like US isn't opening their market enough to make not attacking them worth it. And by starting something with Iran, it basically ensures US is in the worst possible position to survive that scenario.