Energy purchases from Iran have come to be perceived by China as a win-win situation that gives Beijing significant leverage over Tehran (urging it to return to the nuclear deal) while also opposing US sanctions and American leadership in world affairs. However, China’s critical role in the negotiations—and in the enforcement of curbs on Iran’s nuclear and regional ambitions—need to reflect the realization that Iran’s destabilizing and subversive activities across the region actually run counter to China’s own interests in deescalating regional tensions.
China’s Energy Playbook
Despite the ongoing US sanctions imposed on Iran, Chinese customs officials recently reported about the import of crude oil from Iran for the first time in over a year. This did not come as a shock to anyone; China’s energy imports from Iran via third countries or supertankers flagged to Oman, the United Arab Emirates, and Malaysia are among the worst kept secrets in the Middle East.
The 260,312 tons (1.9 million barrels) of Iranian crude oil that China purportedly imported in December is a drop in the bucket compared to its unreported imports from Iran over the last year. United Against Nuclear Iran assesses that China ranked first in recipients of Iranian oil throughout 2021—receiving a total of 310 million barrels of crude oil and gas condensates, which was “more than the entire number of barrels exported to all destinations in 2020.”
In the past Iran was a major supplier to China, but now its energy exports to China account for about 6% of the country’s total crude oil imports. And whereas China accounts for roughly a third of Iran’s trade, Iran accounts for less than 1% of Chinese trade. This raises the question of why China bothers to maintain supply lines from the Persian Gulf if it is still wary of secondary sanctions.
To begin with, when the demand for Iranian energy is low, China can fetch it for bargain prices. Moreover, in the face of a global energy shortage and skyrocketing prices, China has opened national strategic stockpiles in February in coordination with the US, making discounted crude oil all the more lucrative.
More importantly, even symbolic opposition to sanctions on Iran allows China to present itself—at home and internationally—as capable of confronting the world’s most powerful country. As it frequently finds itself on the receiving end of American and European sanctions, China is principally opposed to economic sanctions and “long-arm jurisdiction” from any country.
The sanctions also limit the potential of harvesting a market of 80 million Iranians. As part of their comprehensive partnership, China and Iran signed a 25-year strategic agreement in March 2021, while Iran’s strategic geography on land and sea makes it an important node in President Xi Jinping’s Belt and Road Initiative (BRI).
China earns goodwill in Iran as a friend in need and as one of the few countries that openly deal with the ayatollahs’ regime. Tehran, in turn, is glad to send their top diplomat to genuflect in support of China’s core interests, celebrate its human rights achievements, and applaud its “admirable” contributions to global governance, at a time when the country is under scrutiny due to its ongoing treatment of its Muslim minorities. To a lesser extent, China also benefits by providing economic support to America’s most prominent regional challenger; by keeping Iran afloat, Beijing may be seeking to keep Washington involved in the Middle East, rather than pivot to China’s backyard.
The Other Side of the Coin
In recent months, scholars and policymakers have argued that China’s violations of the sanctions are due to an additional reason: Beijing’s economic lifeline gives it leverage to pressure Iran behind the scenes to return to the negotiating table and make the revival of the JCPOA possible. Some go as far as to assert that “At no point in history has China made such a crucial contribution to world stability as it has today in Vienna.”
This is said to be the case as a result of China’s deft use of carrots and sticks. On the one hand, it maintains a lower ratio of energy purchases from Iran than when President Trump pulled out of the JCPOA in 2018, while limiting cooperation to soft sectors like culture and diplomacy. At the same time, the signing of the 25-year strategic partnership between Iran and China may have been to remind Tehran of the full potential that will be unlocked once sanctions are lifted.
Analysts have pointed out that the US is fully conscious of China’s strategic nudging. Secretary of State Anthony Blinken affirmed that Iran is one of the few areas where Washington and Beijing’s interests still intersect, which could explain the softer “diplomatic approach” of the US to the violations of the sanctions.
Most debates conclude here, but they only tell half of the story. If China is the only reason “there is still hope” for a return to the JCPOA, it must be held accountable for failing to use its influence over Tehran to deter—rather than embolden—its regional aggression.
Beijing’s economic lifeline could explain why Iran is in no rush to reach an agreement after more than eight rounds of hard bargaining. The supreme leader, who now has laid out a set of maximalist demands, has also taken a five-month hiatus and reshuffled the negotiating team with ultraconservatives.
It was through Beijing’s economic reprieve that Tehran has been emboldened to press ahead with its nuclear stockpiling. By granting itself leverage over Iran, China has given Iran the edge to blackmail the West through 60% uranium enrichment and more centrifuges and led former President Rouhani to intimate that Iran could begin enriching uranium to weapons-grade 90% U-235 at any time.
Beijing offers Iran unsolicited moral support for its “legitimate rights and interests,” effectively absolving Tehran of any accountability for the nuclear escalation it has been pursuing since the 1990s. It preaches non-interference and that “the security of one country should not be at the expense of the security of others.” But despite Iran’s assertions that once sanctions are lifted, it will continue to train, supply, and fund armed militias and terrorists throughout the region—as it has for decades—Beijing actively undermines any attempts to link the new deal to the “legitimate rights and interests” of those who are the targets of Iranian subversion and aggression.
China accuses the US of being the sole perpetrator of the Iranian nuclear crisis but keeps silent about Tehran’s provocative actions. It even made sure to accuse the US of “state terrorism” for the killing of terrorist mastermind Qassem Soleimani, commander of the Islamic Revolutionary Guard Corps’ Quds Force.
Chinese opposition to US attempts to extend the UN arms embargo on Iran in 2020 goes deeper, with reports of Iran’s continued interest in purchasing as many as 36 J-10C Chinese fighter jets. According to a Wall Street Journal story from October, Iranian drones in Gaza, Iraq, and Yemen all use the same model engine, the DLE-111, manufactured by the Chinese model-airplane company Mile Hao Xiang Technology. Previous rounds of US sanctions on Iran targeted Chinese companies for proliferation activity, including the Ruan Runling Network in 2017, which supplied Shiraz Electronics Industries with missile technology.
Meanwhile, elsewhere in the region, China has stepped in to fill the void left by Western companies that have been targeted by Iran’s accomplices. Even so, despite Iranian ties with China, the fact that Quds Force Commander Esmail Ghaani exhibits less control over the “Axis of Resistance” than his predecessor, poses a risk to Chinese equities.
With Leverage Comes Responsibility
Thus, by empowering Iran, Beijing imperils the economic stability it seeks to protect—and with it, China’s own growing interests in the region. Indeed, China has been the world’s largest crude oil importer since 2017, with nearly half of its 10.85 million barrels of crude oil coming from the Middle East. This is in sharp contrast to the US and Europe, which are attempting to divest from Middle Eastern oil as part of their transition to carbon neutrality.
China’s economic engagement in the Middle East actually favors countries that see Iran as their greatest threat and, more importantly, are US allies or partners. Saudi Arabia, most notably, is China’s comprehensive strategic partner, its largest crude oil importer, and the Middle East’s most important trading partner.
Beijing is the region’s largest source of foreign direct investment and most important trading partner for other competitors of Iran. In 2020, China surpassed the EU as the Gulf Cooperation Council (GCC)’s largest trading partner, with more than a 15-fold increase from the US$10 billion level in 2000.
The manner in which the Middle East’s burgeoning interests are put at risk by Iran’s regional aggression is best represented by a network of interconnected ports and industrial complexes that stretch from the UAE through Oman and Saudi Arabia to Djibouti in the Horn of Africa, ending in Egypt’s Mediterranean port of Port Said. The increasing attacks on the UAE by the Houthis and Iraq-based militias linked to Tehran have underscored this threat.
More than 200,000 Chinese expats call the UAE home, and it handles 60% of China’s trade with the Middle East, Africa, and Europe. This is also where three civilians were killed in a sophisticated drone, ballistic missile, and cruise missile attack on Abu Dhabi’s airport and oil tankers orchestrated by the Houthis in Yemen, backed by the Iranian Quds Force, just three days after Iran’s foreign minister met his Chinese counterpart on January 14, 2022. The operation echoed an Iranian-linked attack on Saudi Aramco in 2019, after which China was compelled to pay an excess $97 million per day as Brent crude made the biggest jump on record.
In 2008, Iranian proxy Hezbollah launched a barrage of rockets at Haifa, killing eight Israelis and injuring dozens more. The deadly attack took place less than a mile from the newly opened Bayport terminal, built for Israel by Chinese state-owned Shanghai International Port Group, which had been awarded the contract to run it until the late 2040s. By then, it will be connected to the UAE via Jordan and Saudi Arabia, offering Chinese goods an Arab–Med land corridor to mainland Europe that is 40% faster than ferrying through the Suez Canal.
The hazards of Iran’s proxy and partner network extend to Iraq as well. Rockets landed very close to the Chinese consulate in an attack on Erbil in February 2021. Later, in December, the headquarters of Chinese company ZPEC was attacked with rockets and live ammunition in Dhi Qar. Local grievances are at play in some of these operations and militias like Kataib Hezbollah and Asaib Ahl al-Haq have reportedly been pushing for Chinese investment. But with Iran’s direct hold over its militia network in Iraq loosening since the death of Soleimani, Beijing’s interests could be adversely impacted.
When it comes to its own backyard, China would be the first to condemn the “evil forces” of terrorism and religious extremism. It is more forgiving, however, when its hostage-taking (and Holocaust-denying) comprehensive strategic partner repeatedly vows to destroy the State of Israel. To add fuel to the fire, last September Iran was granted permanent membership in the China-led Shanghai Cooperation Organization (SCO), whose stated goal is to fight terrorism.
As it consistently berates the US-led West “hegemonic ambitions” on every international platform, China must be aware that Iran’s promise of jihad against the “enemies of Islam” does not stop at the Middle East’s borders. Its religious fundamentalism has tainted Muslim communities across Africa, Europe, South America, and as far as China’s borders.
Chinese diplomats have a reputation for using colorful language when criticizing America. A favored form of criticism is based on a Chinese legend in which a wise Buddhist monk was asked who could untie a bell from a tiger’s neck, to which he replied, “whoever tied the knot will untie it.”
China made a successful gambit by establishing itself as a crucial actor in Vienna to pursue its own interests, and it has been lauded for keeping the JCPOA alive. Will it be as bold when the time comes to untie the bell that it has tethered?
The opinions expressed in this publication are those of the authors alone.