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... Rebecca Patterson, Senior Fellow, CFR - https://www.cfr.org/experts/rebecca-p... 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/bo... 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/334... 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/pub... 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/ag... Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released at cfr.org/newsletters. 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.