Let's not kid ourselves. China's joint statement with GCC about those 3 islands along with other things is seen in Iran as a huge betrayal. China picked its side here.
And now you have China's vice premier visiting UAE and Iran over the next few days.
UAE is a huge important market for China that is participating in CBDC, building infrastructure with Huawei product, using Chinese vaccines, joining Chinese space program amongst other things
Similarly, Qatar signed the long term LNG deal with China ahead of its deal with Germany.
Arab countries are also picking China as their partner.
The reality is that since withdraw of US troops from Afghanistan, the region is increasingly looking for someone else to protect them. I don't know if this is necessarily the perfect time for China, since they are dealing with a whole bunch of issues at home. However, they have been forced to take this step because a better one may not come up later.
In the past, Western countries always say that China and Saudi relationship won't reach to a certain point, because China will continue to support Iran. That imo was always nonsense and I will explain further on why China pick sunnis over Iran later. But the reality is now that they have done so and elevated their relationship with Saudis to the highest level, what's preventing them from getting in bed further with the GCC/Arab countries. They've agreed to every major position held by GCC countries and are willing to provide them all the tech and military hardware. What does the West have to offer over this in the long term? They have F-35s? Well, export J-35s will be available in a couple of years. They have burkes, well 052D is now available and it will have hypersonic missiles too. Control of international finance with SWIFT, commodity trading and reserve currency? Well, this is the first step to push the Chinese exchanges to the forefront.
China has a lot of things it needs to do still. I will have to look into Shanghai oil & gas platform to understand how this is setup, but I presume a lot of work to be done here to get all the Arab countries to use it and then to get other Asian countries to trade on this platform. Arab countries will now be paid in Yuan, so they will need places to spend that money and to invest that money. China needs a more robust bond market to invest that money and open up its financial system for foreign investment more. It will need to allow more JV holdings on "strategic" energy sector assets in China. But there is a path here. If China wants Yuan to be bigger and for itself to play a larger role in International financial market, then it needs to improve its tech here and its openness. The importance of the Yuan for oil deal is that it wasn't just limited to oil from Saudis to China. It's encouraging all the largest non Western producers to use Yuan on China's own platform. You think Russians won't have to use this platform eventually? And then, if Australia wants to keep exporting LNG to China, it better use this platform too. Eventually, you get all of ASEAN countries to use it. WTI/Brent are traded a world away. It doesn't make sense for these countries to continue buy oil products from ICE/CME/LME. This is what China wants to build up as alternative. None of this will happen over night. China needs to build these things up.
