Iran War Spirals + Oil Shocks Keep Coming + China’s Advantage | The Spillover

As the U.S.-Israel conflict with Iran escalates, global markets are absorbing the shocks: oil prices are swinging, inflation expectations are rising, and safe-haven assumptions are being tested. China, by contrast, is looking relatively resilient, buoyed by strategic energy reserves, diversified supply chains, and policy flexibility. This episode examines how the conflict is driving inflation, complicating monetary policy, and handing China a geoeconomic edge.

Submit Your Question For a Chance to Win a Copy of Sebastian Mallaby’s Book The Infinity Machine! https://cfr.org/giveaway.

Hosts:

Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, CFR - https://www.cfr.org/experts/sebastian-mallaby

Rebecca Patterson, Senior Fellow, CFR - https://www.cfr.org/experts/rebecca-patterson

00:00 - Introduction to The Spillover
00:33 - Today’s Topics: Israel-Iran Conflict, China’s Economy, & AI
01:37 - China’s Energy Resilience Explained
02:23 - Shanghai Report: Economic Realities
05:03 - Central Bank Policy & Interest Rates
07:40 - Geopolitical Risks to US Power
09:40 - Economic Costs: War & National Debt
14:10 - Global Food Security & Supply Chains
17:30 - US-China Relations & Diplomacy
18:20 - China’s Energy & Oil Strategy
22:12 - Friend-Shoring vs. Global Trade
24:58 - China’s 5-Year Plan & Growth Targets
28:20 - Real Estate Risks & Deflation
33:20 - US-China Trade: The Xi Meeting
38:07 - The Global AI Technology Race
46:18 - AI Governance & Open-Source Risks
48:44 - Key Takeaways: Iran, China, & Policy
51:17 - The Spillover: Weekly Market Wrap-up

Mentioned on the Episode:

Sebastian Mallaby, The Infinity Machine: Demis Hassabis, DeepMind, and the Quest for Superintelligence, Penguin Random House - https://www.penguinrandomhouse.com/books/752231/the-infinity-machine-by-sebastian-mallaby/

Coco Feng, “China Issues New Safety Rules for OpenClaw. Here Are the Dos and Don’ts” South China Morning Post https://www.scmp.com/tech/article/3346269/china-issues-new-safety-rules-openclaw-here-are-dos-and-donts

Hany Abdel-Latif and Adina Popescu, “Spillovers From Large Emerging Economies: How Dominant Is China?,” International Monetary Fund (IMF) https://www.imf.org/-/media/files/publications/wp/2025/english/wpiea2025027-print-pdf.pdf

Michael Langemeier and Joana Colussi, “Farmer Sentiment Drops Sharply at the Start of 2026 as Economic Concerns Increase,” Purdue University/CME Group https://ag.purdue.edu/commercialag/ageconomybarometer/farmer-sentiment-drops-sharply-at-the-start-of-2026-as-economic-concerns-increase/

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The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.

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