On 6 July, the US Treasury Department announced new sanctions on Iran, targeting the country’s oil and petrochemical trade network.
One day later, Chinese Foreign Ministry Spokesman Zhao Lijian responded by making clear Beijing’s rejection of Washington’s decision to further sanction the Islamic Republic against the backdrop of dwindling prospects for a revival of the Joint Comprehensive Plan of Action (JCPOA).
“China has always been firmly opposed to illegal and unjustifiable unilateral sanctions and so-called long-arm jurisdiction by the US. We urge the US side to abandon the wrong practice of resorting to sanctions at every turn and contribute positively to negotiations on resuming compliance with the JCPOA,” said Lijian.
Despite the negotiating parties reconvening in Vienna this week, few analysts today remain optimistic about the US and Iran finding a middle ground that can lead to the 2015 Iran nuclear deal’s restoration. As one of the JCPOA’s signatories, China sees the lack of resolution over the nuclear accord as problematic, and Washington’s policies that have scuppered the accord as troublesome.
Beijing’s priority is stability
The primary reason China favors the nuclear deal is due to Beijing’s vested interest in Eurasian stability. “I think that the Chinese have more to gain from a return to the JCPOA than from the current instability that really is a result of the lack of an agreement,” Andreas Krieg, an associate professor at the School of Security Studies at King’s College London, told The Cradle.
If talks on reviving the deal fall apart in acrimony, there will be a higher risk of military confrontation in the Persian Gulf. Not only would a conflict greatly threaten Beijing’s energy security, but this strategic waterway is also vital to China’s ambitious Belt and Road Initiative (BRI). Although the Persian Gulf is not officially part of the BRI, the body of water and its energy resources are critical to the initiative’s success.
“Iran’s geographic location at the center of land and maritime trade routes makes it a key component for the execution of [BRI], as it can also serve as a strong connection between China and Central Asia – especially considering the United States’ withdrawal from Afghanistan and Russia’s inability to meet the developmental needs of these countries,” explained Saad Ali Al-Qahtani, a Saudi researcher and analyst.
Sino-Iranian common cause
Additionally, Beijing and Tehran seek to deepen bilateral cooperation through various frameworks such as the Shanghai Cooperation Organization (SCO), of which Iran became a permanent member in 2021. By entering the exclusive, nine-member SCO, Tehran took an important step in its goal to shift its foreign policy and trade relations eastward.
Late last month, China’s President Xi Jinping spoke with his Iranian counterpart Ebrahim Raisi and emphasized how Beijing is supportive of West Asian countries such as Iran advancing on their “independent development paths.”
There are also important security dimensions to the SCO. Amid the early stages of Washington’s “War On Terror” following the 2001 attacks in the US, the chaotic landscape in Afghanistan was the main reason for the SCO’s establishment.
Today, the threats of terrorism, humanitarian crises, and instability in post-occupation Afghanistan give Beijing and Tehran much common cause. With both China and Iran worried about violent extremists such as ISIS-Khorosan exploiting chaotic conditions in Afghanistan in ways that could spill into neighboring countries, the two states are set to enhance bilateral security cooperation vis-à-vis Taliban-ruled Afghanistan through the SCO.
Why Beijing wants the JCPOA
In contrast to the US, China pursues a friends-of-all foreign policy in the Persian Gulf sub-region, fostering strong partnerships with Iran as well as all six Gulf Cooperation Council (GCC) states. In terms of the JCPOA, Sino-Iranian relations have much at stake.
“China has clearly and consistently supported the nuclear negotiations and the JCPOA. This is because the sanctions are the primary obstacle to increasing economic and political ties between China and Iran and making progress on the vague goals of the 25-Year Iran-China Strategic Cooperation Agreement,” explained Bill Figueroa, an expert in Sino-Iranian history and contemporary issues, in an interview with The Cradle.
“Chinese investors and the Chinese state are wary of getting further involved in Iran until the sanctions issue is settled, regardless of what political agreements have been signed.”
Other experts have reached similar conclusions. “China supports a return to the JCPOA, and a pretty strong case can be made for the [accord] being in Beijing’s economic and security interests,” Jacopo Scita, an al-Sabah doctoral fellow at Durham University, told The Cradle.
Ultimately, decisions made in Washington and Tehran will determine the JCPOA’s fate. While Beijing realizes that its ability to push for a revival of the deal has major limitations, China will try to increase the odds by simultaneously condemning the US’s decision to unilaterally pull out of the accord in May 2018 and blaming US President Joe Biden’s administration for not swiftly bringing Washington back into compliance, while also trying to pressure the Iranians into accepting some painful compromises that are necessary for the deal’s adoption.
If negotiations in Vienna and Doha fail to revive the deal, it is safe to assume that China will continue pushing the west to lift sanctions on Tehran. After all, the Chinese and Iranians signed a 25-year cooperation agreement supposedly valued at USD 400 billion (although the true value is likely much less than that figure).
However, without an agreement on the JCPOA, Beijing knows that its efforts to significantly deepen Sino-Iranian economic relations could face difficult hurdles. Despite all the rhetoric in Washington about an “alliance” between China and Iran, the truth is, as Figueroa pointed out, that US sanctions on Iran have made the Chinese approach the Islamic Republic quite cautiously and with some reservations—at least up until now.
China’s alternative strategy
By the same token, it is also true that China could find ways to benefit from the JCPOA not being revived. Iran is clearly reliant on trade with China due to US-imposed sanctions. This reality has served Beijing’s interests when it comes to gas and oil deals with Tehran. Geopolitically, the US’s policies toward Iran have served to keep Tehran pivoting closer to China and further away from the west.
For years, the Iranians have prioritized cultivating relations with Beijing and Moscow to reduce their reliance on the west. At the end of the day, that is unlikely to change.
“Even with a return to the JCPOA we won’t see a rapprochement between Iran and the west,” said Krieg. “We won’t see a return of the focus of Iran from China to Europe. So, I think that’s not a threat to China per se.”
In preparation for the likely scenario in which nuclear negotiations collapse, it is worth examining the extent to which Beijing would flout US-imposed sanctions on Tehran and enable the Iranians to bypass restrictions. The answer probably has more to do with Sino-American than Sino-Iranian relations.
“China would only be helpful to the extent that they would not incur unnecessary costs with the US,” Rouzbeh Parsi, the head of the Swedish Institute of International Affairs’ Middle East and North Africa program, told The Cradle. If tensions between Beijing and Washington grow increasingly confrontational after the JCPOA falls apart, the Chinese will see boosting trade with Iran as “less of a problem and can reinforce [a] signal of autonomy vis-à-vis the US”.
Elbowing Washington aside
Right on cue, House Speaker Nancy Pelosi’s “extremely dangerous” visit to Taiwan on 2 August – along with other issues – have set in motion severe frictions in Beijing-Washington relations. It would be safe to conclude that China will now be significantly more keen to leverage its partnership with Iran against US interests in West Asia.
Tehran’s strong words in support of China’s positions against the US on the Taiwan file has also underscored Iran’s determination to use the Washington-Beijing escalation to reap benefits as great power competition continues to heat up.
In light of President Vladimir Putin’s visit last month to Tehran, where he met with the Iranian and Turkish presidents, it is necessary to take stock of the extent to which both Russia and China have helped Tehran weather Washington’s policies against Iran, particularly in a post-JCPOA context.
One objective that the US’s geopolitical rivals would like to see is a future in which the world becomes much less dependent on the US Dollar. This would have major implications for Iran’s economic relations with other countries.
In terms of moving the world toward de-dollarization, Parsi explained that China is the “key player” while Russia has the “weight and now motivation to speed up this” change in the international system. “Iran has wanted and needed it for a long time but is not an important actor in its own right to create something that is consequential for how global trade is done. Now if all three seriously pursue this in concert, then it will make a difference in the medium and long term,” as Parsi put it.
On 26 July, Iran’s Economy Minister Ehsan Khandouzi announced that the Russian ruble has already replaced the US dollar in Iran’s trade with Russia. Khandouzi also stated that Iran is working on similar plans for his country’s trade with China, India, and Turkey too.
Mobarakeh Sedaghati, an Iran-based expert on Sino-Iranian relations, told The Cradle that “the similar anti-American policies of China and Iran regarding protesting the dominance of the dollar in the international economy will lead to the creation of new monetary and financial relations between the parties and countries that criticize the hegemony of the dollar.”
Above all, China seeks Persian Gulf stability
As Iran’s leadership looks to the future, China will be an extremely important ally irrespective of the JCPOA’s fate. With or without the 2015 nuclear accord being revived, Beijing will be in a strong position to take advantage of its influence over Iran and find opportunities to benefit from its partnership with the Islamic Republic in a host of ways.
Strategic trade and financial objectives aside, at the heart of China’s JCPOA interests are its concerns about the possibility of an armed conflict erupting in the Persian Gulf.
Such a scenario could prove devastating to supply routes that are central to Beijing’s interests in this region. Just as the “Tanker War” of the 1980-1988 Iran-Iraq conflict led to grave concerns in the US about its ability to access Persian Gulf hydrocarbons, China finds itself in somewhat of a similar position today.
Whereas the US has become significantly less dependent on regional oil and gas in the 21st century, the Chinese economy remains highly reliant on the strategic body of water for energy security.
As China sees it, a return to JCPOA is the best path forward to a future in which Beijing’s interests can continue to be advanced through greater stability in the Persian Gulf and West Asia.
Unless and until the parties revive the nuclear accord, Chinese officials will have reason to remain deeply concerned about a flare up of tensions that could greatly harm Beijing’s interests.