Analysing the Strategic Evolution of China-Iran Relations

China and Iran, both ancient nations with rich historical legacies and former empires that shared a common border in the past, maintain deep and enduring bilateral relations. What sets their relationship apart is the remarkable level of trust between the two nations. They have consistently supported each other on various regional and global stages, even during challenging times such as the international economic sanctions imposed on Iran. China’s approach towards Iran has been perceived as a form of soft balancing against the United States (US) in the Middle East. China’s economic relations with Iran have posed challenges to US efforts to isolate Iran on the global stage, often leading to violation of US sanctions both directly and indirectly. Over the years, trade between Iran and China saw significant growth, ranging from $ 5.6 billion in 2003 to a peak of $8 billion in 2014. This trend was reaffirmed during the 15th BRICS Summit in Johannesburg on 23 August 2023, where President Xi Jinping and Ebrahim Raisi discussed ways to enhance cooperation within BRICS and other multilateral forums, highlighting the dynamic shift in the geopolitical landscape.

The Joint Comprehensive Plan of Action’s (JCPOA) approval, to which China actively contributed, facilitated the beginning of a new phase in Sino-Iranian relations. In the aftermath of the 2016 JCPOA implementation, Xi visited Iran to strengthen bilateral relations with China. Following the implementation of the Iran deal, Chinese investment in Iran increased dramatically over the next two years. The US unilateral withdrawal from JCPOA in 2018 allowed China to reaffirm its role as a responsible stakeholder in the international community. Beijing has maintained political and economic cooperation with Tehran that appears compatible with maintaining its role as a friendly stakeholder.

However, it’s imperative to acknowledge that amidst recent strides, Iran and China remain cautious about their regional involvement. This is mainly due to challenges from US sanctions, which have impacted the China-Iran Comprehensive Strategic Partnership.

Despite sanctions, China has continued to import a small but significant amount of Iranian oil through third countries and ship-to-ship (STS) transfers to avoid the sanctions. In 2021, the two countries signed a 25-year roadmap for cooperation under a Comprehensive Strategic Partnership with investment over 25 years in Iran’s infrastructure, finance, and oil industries. The two sides pledged more than tenfold bilateral trade up to $600 billion by 2026. The Trump administration’s sanction disrupted the economic exchanges between China and Iran. However, China has become an essential financial partner by importing Iranian oil through various covers. The relations could reach new heights once the sanctions are lifted. In December 2022, Iranian Finance and Economic Affairs Minister Ehsan Khandouzi said that Iran and China have finalised 16 memorandums of understanding (MOU) under the two countries’ strategic 25-year agreement framework.

China’s joint statement with Gulf Cooperation Council (GCC) members during President Xi’s visit to Riyadh in 2022, which addressed Iran’s nuclear program and territorial dispute, caused tension in Iran. Critics in Iran have raised concerns about overreliance on China and Russia in their foreign policy. Some scholars anticipate strain in relations with China due to the stalled JCPOA revival and Iran’s involvement in the Ukraine conflict, where China has adopted a neutral stance.

China’s Foreign Ministry spokesperson Wang Wenbin emphasised the enduring friendship between Iran and China, reaffirming the commitment to their comprehensive strategic alliance. Chinese Vice Premier Hu Chuchua echoed this statement during his meeting with Iranian President Ebrahim Raisi, emphasising China’s strategy on their relationship and its unwavering dedication to their Comprehensive Strategic Partnership. The opening of China’s Consulate General in Bander Abbas and the affirmation made by the Chinese Ambassador to Iran, Chang Hua, underscore China’s strategic view of its relations with Iran. This marks a significant milestone in their bilateral ties.

China continues to play a pivotal role in Iran. As Iran’s largest trade partner for the tenth consecutive year, bilateral trade reached nearly $16 billion in 2022, highlighting their robust economic ties. Iran’s non-oil exports to China reached $6.05 billion in the first 11 months of 2022, representing a 5% increase yearly. Noteworthy figures from the Iran Chamber of Commerce indicate an ongoing improvement in economic relations between the two nations, emphasising China’s status as one of Iran’s trusted partners.

On February 14, 2023, Iranian President Raisi’s visit to China reached a significant milestone as both leaders signed 20 agreements to boost security and economic cooperation. These agreements included China’s commitment to invest in joint projects such as high-speed rail systems and airport improvements in Iran. The visit solidified their unified front against perceived Western interference and emphasised a mutual commitment to safeguarding sovereignty.

China’s involvement in brokering improved relations between Iran and Saudi Arabia is an indication of a changing global order. It underscores China’s growing influence in the Middle East, driven by strained relations between the US and Iran. China’s role is viewed as a low-risk, high-reward strategy, benefiting its energy interests in the Gulf. Improved dialogue between Iran and Saudi Arabia offers hope for addressing their longstanding geopolitical differences. The recent thaw in Saudi-Iranian relations is a significant breakthrough, leading Saudi Arabia to reopen the diplomatic mission in Tehran and Mashhad. Such developments mark a substantial reduction in regional tension, which can safeguard global powers’ interests in the Gulf. Past agreements, such as the 2001 security agreement and the Cooperation Pact, signal progress, but long-term reconciliation remains uncertain due to historical tensions and geopolitical factors.

The recent diplomatic development raises important questions about the evolving regional landscape and China’s involvement in the region, which could impact Israel’s strategic considerations. China’s role in facilitating the agreement signals an expanding political presence in the region, potentially altering the dynamics and affecting US-Iran relations,

Simultaneously, the US has urged Iran to stop the sale of armed drones to Russia, particularly those used in the Ukraine conflict, as part of broader discussions aimed at de-escalating tensions. These negotiations run alongside efforts to revive talks regarding Iran’s nuclear program. In response, Russian Deputy Foreign Minister Sergei Ryabkov, on 26 August 2023, affirmed that Russia’s military cooperation with Iran remains unaffected by geopolitical pressure, responding to reports of US efforts to halt Iran’s drone sales to Moscow. Ryabkov emphasised the independence of both countries and their resistance to US dictates.

However, it’s imperative to acknowledge that amidst recent strides, Iran and China remain cautious about their regional involvement. This is mainly due to challenges from US sanctions, which have impacted the China-Iran Comprehensive Strategic Partnership. A former Iranian United Nations diplomat cautioned that US sanctions hinder Iran’s benefits from BRICS and urged to prioritise nuclear negotiations and compliance with the Financial Action Task Force (FATF).

The future trajectory of this relationship hinges on China’s broader Middle East policy and enduring commitment to Iran.  Iran and China’s cooperation may continue, and the revival of the nuclear deal will further boost this partnership. However, in the complex geopolitical situation, acknowledging the shifting dynamics in the Middle East is crucial. China’s increasing political influence needs careful consideration. The US seeks to promote regional stability while considering Israel’s concerns about the evolving situation with Iran. The uncertainty about the revival of JCPOA adds another level of complexity to the situation. In navigating these challenges, a cautious and balanced approach that considers all stakeholders’ perspectives is imperative to ensure the region’s security and stability.

Bashira Omeed

Bashira Omeed serves as an Assistant Editor and Researcher at the Centre for Strategic and Contemporary Research. She has an MPhil in International Relations from NDU, Islamabad. Her research focuses on diplomatic relations, defence and security, and international affairs.

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