Iran-China relations likely to expand in near future

Iran, China, relations,
Chinese President Xi Jinping meeting Iranian Supreme Leader Ali Khamenei . (C) CC 4.0

With U.S. President Donald Trump withdrawing the United States from the 2015 landmark nuclear accord with Iran that was brought about by his predecessor Barrack Obama, Iran’s Foreign Minister along with Javad Zarif, one of the key architects of the nuclear deal, visited Beijing kickstarting a growing bonhomie in Iran-China relations.

Although the U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA), the agreement which provided economic relief to Iran from U.S sanctions, provides for a grace period for U.S. companies to wind down their operations in the Islamic Republic, Zarif’s eventful meeting with Chinese Foreign Minister Wang Yi did not come as a surprise to many analysts and investors.

The Trump Administration’s policy of ‘act first, think later’ vis-a-vis the Middle East is not surprising given Trump’s unorthodox diplomatic action – relocating the U.S. embassy to Jerusalem. Thus it will only be prudent to assume that the Trump Administration will pressure other signatories to the JCPOA, which include Europe, Russia and China, to limit, if not completely cut-off their ties with Iran.

This is where things gets interesting in Iran-China relations, the leverage the United States has over China is somewhat limited given Beijing’s compelling reasons to invest in the relationship given the vast sums it has sunk into its Belt and Road Initiative – an initiative which foresees an active participation from Iran.

The Belt and Road Initiative is at the heart of China’s geostrategic and economic ambitions. Given Iran’s geographical location, it is more cost effective, for Beijing, to run trains through Iran rather than take the longer and potentially unstable shipping routes than run through the Straits of Malacca.

Furthermore, China has also developed the China-Pak economic corridor, which provides it access to the port of Gwadar, in order to avoid taking the longer and more problematic Indian Ocean route. Thus, despite threats of secondary sanctions from the United States, since Iran controls the narrow Strait of Hormuz and given Beijing’s growing appetite for oil and gas, it has very strong incentives to nurture Iran-China relations.

Case in point: China has already lent Iran $1.5 billion to finance the electrification of the Tehran–Mashhad rail corridor; it has also invested in the exploration and development of new oil fields at Yadavaran and Azadegan. On a smaller scale, there are a number of direct priviate Chinese investments projects, ranging from paper recycling to public transport, which now dot Iran.

In many ways, Iran could potentially meet China’s growing economic ambitions. Iran has what it takes to stand down dissent and is not beset with the typical issues that hounds China’s partners, such as Pakistan, where Chinese businessmen have been the victims of targeted killings apart from the daily doze of threats from terrorism. To boot, Iran-China relations are free from the concerns of human rights that typically dog Western powers’ in their interaction with China.

Given the fact that Beijing stood as a stalwart ally during Iran’s years of sanctions and with China purchasing of more than 600,000 barrels of oil per day in 2017-2018, making it Iran’s largest single trading partner, China is likely to be indispensable partner and play a strategic role as it tries to maintain its links with Iran, be it inside or outside of the JCPOA.