Iran in Focus:

InterRegional for Strategic Analysis organized a panel discussion entitled, "Iran in Focus: China’s Stance on Middle East Issues" The featured speaker was Dr. Jacopo Scita, a policy fellow at the Bourse & Bazaar Foundation in the UK. Dr. Scita has completed his doctoral studies at the School of Government and International Affairs at Durham University. The panel participants shed light on China’s Middle East policy with a special focus on Chinese-Iranian relations. Discussants affirmed that China’s ties with Iran are unlike its relations with other Middle Eastern countries. The participants identified certain key factors that have shaped cooperation between the two countries as well as challenges for future cooperation.

Strong Ties

Last year, China and Iran celebrated 50 years of diplomatic relations, although bilateral cooperation has extended beyond the diplomatic sphere. There have been extensive ties between the two countries, both before and after the Iranian revolution. Iran and China have never found themselves in a direct confrontations or conflict with the other side. The most important elements of these ties are as follows:

1. China sees Iran as a "soft balancer": China considered Iran under the Shah’s rule as part of a "soft balancing" approach in dealing with the Soviet Union and the latter’s expansionist plans. China realized the importance of building good ties with Iran and that such relations would be beneficial in curtailing Soviet expansion at that time.

2. Relations remained close after Iranian revolution: Chinese-Iranian relations were not affected by the Islamic Revolution in Iran. After 1979, Tehran maintained the same standing within China’s strategic outlook. China continued to see Iran as necessary to its soft balancing strategy, which it now employed to counterbalance the US. Washington had established hegemony in the Middle East and China saw continued strong relations with Iran as necessary to further Beijing’s interests in the region and to prevent a US-driven unipolar world order.

3. Stability of Beijing-Tehran ties despite uneven balance of power: China and Iran were two major empires located along the Silk Road, and which never fought each other at any point in history. Today, the two countries are grappling with asymmetric power dynamics. China has become the second largest economy globally and is an emerging world power, while Iran remains a mid-range regional power. However, this has not caused bilateral relations to deteriorate.

4. China depends upon the revival of the Iranian nuclear deal: According to the main speaker on the panel, the nuclear deal has potential repercussions for Chinese-Iranian rapprochement. For China, the deal would be the best security arrangement for the region, given that any military action against Iran because of its nuclear program would create a major crisis for China and its domestic security. The deal would ensure that Iran does not become a nuclear power and that no such attacks occur against it. China would also be happy to see the deal revived so that sanctions are reduced and Chinese investments can begin to flow into Iranian markets again.

Objectives for the Partnership

Iran enjoys a special standing within China’s strategy unlike that of the Gulf or other Middle Eastern countries. Nevertheless, Beijing considers Tehran to be its "junior partner." Although China’s dealings with Iran have been controversial in light of international sanctions imposed on the latter, the objectives of this partnership for Beijing can be summarized as follows:

1. To balance ties with the Gulf and Iran: China believes that developing durable ties with the Gulf will require bolstering cooperation with three countries in particular: the UAE, Saudi Arabia, and Iran, although its ties with the UAE and Saudi Arabia take precedence. This focus is attributed to the centrality of these three countries in the region.

2. To maximize economic benefits for Beijing and secure its oil: Although Iran is a mid-range power and is China’s "junior partner," Iran is nevertheless a formidable country with a well-developed economy. China also imports most of the oil it needs from the Middle East, and Iran has some of the largest oil reserves in the world. Oil is the key driver for Tehran-Beijing relations. Importing Iranian oil has become very risky for China in light of the sanctions imposed on Iran. However, China had not been prevented from importing Iranian oil and had done so through intermediary countries such as Malaysia. This became clear from the China’s reported data, which showed that Malaysia had become its primary oil supplier. This oil is likely to have originated from Iran.

3. Stability of Beijing-Tehran ties despite uneven balance of power: China and Iran were two major empires located along the Silk Road, and which never fought each other at any point in history. Today, the two countries are grappling with asymmetric power dynamics. China has become the second largest economy globally and is an emerging world power, while Iran remains a mid-range regional power. However, this has not caused bilateral relations to deteriorate.

4. China depends upon the revival of the Iranian nuclear deal: According to the main speaker on the panel, the nuclear deal has potential repercussions for Chinese-Iranian rapprochement. For China, the deal would be the best security arrangement for the region, given that any military action against Iran because of its nuclear program would create a major crisis for China and its domestic security. The deal would ensure that Iran does not become a nuclear power and that no such attacks occur against it. China would also be happy to see the deal revived so that sanctions are reduced and Chinese investments can begin to flow into Iranian markets again.

Future Challenges

The future of Chinese-Iranian relations depends upon several factors. Despite Iran’s importance for China, there are many challenges that could prevent further development of bilateral cooperation. These challenges can be summarized as follows:

1. Ongoing sanctions against Iran: As a result of economic sanctions on Iran, and particularly since the breakdown of the Joint Comprehensive Plan of Action (the nuclear deal), Iranian exports to China have fallen. China no longer says that it is importing Iranian oil, which significantly alters the balance of trade between the two countries. China has begun to diversify its oil suppliers to include other countries such as Saudi Arabia. With regard to Chinese investment in Iran, investment had been very high under the nuclear deal but had fallen again after former US President Donald Trump pulled out of the deal and reimposed sanctions. As soon as sanctions were reduced, China would be able to invest in Iranian markets again and buy cheap Iranian oil.

2. Reduced importance of oil within China’s energy security strategy: Although oil has become less important within China’s energy security strategy, it remains an important political matter for Beijing. The Iranian Revolutionary Guard has sometimes threatened to close the Strait of Hormuz if Iran was not allowed to use the passage to export oil. However, this was not a serious threat because Iran could not in fact deal with the costs of such a move. Closing the strait would be detrimental to its own interests as well as those of China, its only economic partner.

3. China’s focus on the Indo-Pacific over Iran: The Indo-Pacific region has come to the forefront for China. Iran is now a second priority for China, and that if China’s interests with Iran are at odds with what needs to be done to bolster Chinese influence in the Indo-Pacific, then China will prioritize Taiwan and the South China Sea. Given ongoing friction with the US in that region, China could forgo ties with Iran in order to achieve other objectives in the Indo-Pacific.

4. Great power competition and ramifications for Chinese-Iranian relations: Great power competition has cast its shadow over Chinese-Iranian relations. This includes a world order that is shifting away from US hegemony and the emergence of various other world powers, particularly China. As a result of these shifts, Iran joined the Shanghai Cooperation Organization and received full membership after years of hesitating to do so. Military cooperation between Russia and Iran has also been ramping up during the war in Ukraine. There is also the Chinese-Iranian Comprehensive Strategic Partnership, which was launched in 2016. Neither Iran nor China have given attention to further developing that partnership and the parameters of the agreement remain unclear.

5. Military cooperation between Moscow and Tehran during the Ukraine war: China is not happy about Russian-Iranian military rapprochement during the ongoing Ukraine war. Since the war broke out, China has tried to maintain a neutral stance. This expanding cooperation between Tehran and Moscow threatens Beijing’s "neutral" position on the war. The Gulf was very shrewdly balancing ties with Washington and Beijing. China is investing significantly in the Gulf, which puts the former in a position of power. However, this might not be enough in light of the security assurances that the US can offer. China does not intend to play a security role in the Middle East and notes not want to replace the US in that regard, at least in the short term. It does not have the capacity to take on that role and is also focused on the Indo-Pacific region.

6. Negative fallout of Iran’s policies for China’s domestic sphere: China is trying to prevent Iran from taking steps that could have negative ramifications for the region and for China. China is concerned about the activities of its Muslim minority. China is interested in Iranian security affairs and is afraid that any war in Iran or attack on any of Iran’s nuclear installations could create another Iraq or Afghanistan, with Islamism potentially spreading within western China.

In conclusion, the Chinese-Iranian ties have been well-established for decades. However, great power competition in the region is now the key factor shaping driving bilateral relations. Although Iran is of secondary strategic importance to China, there are major geopolitical reasons for China to strengthen its cooperation with Iran. There is also the possibility that this bilateral cooperation could further expand if international sanctions on Tehran recede. China is also trying to form an eastern bloc separate from the West, in order to avoid sanctions of the kind that are currently being imposed on Russia.