China's reliance on the Suez Canal as a critical maritime route would be a vulnerability if tensions keep ratcheting up in the Red Sea and the Taiwan Strait.

Completed in 1869, the Suez Canal runs across an isthmus of Egypt to connect the Mediterranean and Red seas and provide a path between Africa and Asia.

One of the world's most used shipping lanes, the canal receives about 30% of global maritime shipping cargo. More than 1 million barrels of crude oil pass through the Suez Canal into the Red Sea each day.

For China, specifically, the canal provides the shortest path to supply Europe and a key avenue to receive Russian oil imports.

Approximately 60% of Chinese trade with Europe typically transits through the Suez Canal, according to an analysis by investment firm Fitch Ratings.

The importance of the Suez Canal and the region has been underscored by recent attacks by Yemen's Iran-backed Houthis on commercial vessels in the Red Sea.

The attacks, which began in November, have disrupted commerce and endangered the lives of civilian sailors, forcing some vessels to detour via Africa's Cape of Good Hope.

The detour extends travel by 10 to 15 days and has led to increased operational costs for Chinese and other exporters, including for fuel and labor, straining profit margins and complicating supply chain logistics.

Restricting access

In the event of a crisis in the Taiwan Strait, the United States and other Group of Seven (G7) nations could potentially impose sanctions on China.

The G7 nations had a rapid and coordinated economic response to Russia's invasion of Ukraine, indicating the ability to do likewise if China escalated against Taiwan.

The economic countermeasures could include restrictions on trade in major industrial sectors or more narrow limits on subsectors with high dependencies on G7 countries.

Sanctions could also be applied to China's use of the Suez Canal. In this scenario, the G7 nations would likely compensate Egypt for the loss of revenue incurred by restricting Chinese access.

Over 100 million jobs in China depend on foreign final demand, and nearly 45 million of these jobs depend on final demand from G7 countries, according to an analysis by the Atlantic Council.