Iran and China
China does not seem to have much luck in picking political allies. Recent development in Venezuela and Cuba and a rightward shift of several countries is not favorable for China. The same is the case with Iran. China and Iran maintain a comprehensive strategic partnership, largely driven by transactional economic and energy interests, making China Iran’s largest trading partner and primary buyer of its oil. In 2021, they signed a 25-year cooperation agreement spanning trade, security, and technology to mitigate Western sanctions and counter US influence. Chinese purchases account for roughly 90% of Iran’s oil exports. While the mentioned 25-year, $400 billion investment pact, actual investment has been relatively low, about $9 billion in investment. China has been supporting Iran’s military modernization, including aiding its missile and drone programs through dual-use technology transfers. They engage in joint military exercises and share intelligence. The U.S. basically has allowed this to happen and much of the military modernization has been shipped to Hamas and Hezbollah, resulting in wars with the U.S. and Israel. Both countries generally align in opposing U.S. influence in the Middle East, even though Iran and China do not have a formal alliance.
Observers in the U.S. has long accused China of propping up Iran’s regime and the main reason is to get cheap oil from Iran and to gain more global influence. Another reason might be to gain influence at the expense of the U.S. in what China sees as a global competition for dominance. Chinese banks and firms have helped Iran bypass Western sanctions by facilitating oil transactions and financial services. Despite the strategic partnership, China’s interests are not existential and Beijing acts pragmatically, to protect its broader global economic interests.
As Trump is preparing to meet Xi in China in mid-May, he will certainly bring up Iran. Trump has already said he asked Xi directly not to supply weapons to Iran. He will likely repeat or reinforce that demand, possibly more forcefully. The U.S. has been pushing China (and others) to distance themselves from Iran economically and politically. That likely means Trump will pressure Xi to cut or limit trade with Iran, especially oil, avoid financial or diplomatic support and stay aligned with U.S. pressure tactics.
The China-Iran relationship is not a formal alliance, but two countries willing to work together toward a common goal: a loose partnership aimed at countering Western influence, particularly that of the United States and its allies. Understanding what each country contributes to, and gains from, this relationship helps explain the dynamics behind the current conflict involving Iran, the U.S., and Israel.
While the Iranian regime has long made clear its determination to destroy Israel, the broader confrontation unfolding extends beyond Israel. It is also shaped by the growing cooperation between Iran and China, and their effort to diminish U.S. dominance.
After all, China has been behind Iran’s efforts to promote terror in the Middle East. Despite U.S. sanctions, China buys most of Iran’s oil output, and at discounted prices to boot. This allows Iran to sidestep sanctions and keeps the lights on. Ever since the Islamic revolution in 1979, the U.S. has imposed sanctions on Iran for various forms of malign activity, hostage taking, terrorist attacks around the world, human rights violations, and to counter nuclear and sensitive technologies. Within a month of starting his second term, Trump implemented a robust and continual sanctions enforcement campaign that denies the Iranian regime and its terror proxies’ access to revenue.
Yet, Iran has still managed to maintain its position as the world’s leading sponsor of international terrorism. And China, for its own economic interests, has been more than happy to help Iran evade sanctions and do business. In addition to oil, China also buys petrochemicals, minerals, and food from Iran, which acquires machinery, vehicles, and electronics from China. The consequences of countering those efforts do not hurt China. Instead, sanctions work in China’s favor. China has also frequently used its diplomatic influence to shield Iran from international pressure, including opposing or weakening efforts at the United Nations to confront Tehran over its nuclear program and regional activities.
While China does not formally take a position on the Iranian regime’s human rights tactics, it has developed technology and surveillance infrastructure to restrict online freedom and oppress its own citizens, tools it has reportedly exported to Iran. Two Chinese technology companies have built significant portions of Iran’s telecommunications infrastructure and one company in particular has provided surveillance to the government-controlled company that runs most of Iran’s landline telephone services and Iran’s Internet traffic.
Another important aspect of China’s interest in the region is that the Middle East sits at the crossroads of its ambitious Belt and Road Initiative, which aims to revolutionize trade throughout Asia, Europe, and Africa with transportation, digital infrastructure, and energy networks. All countries are intertwined economically and the U.S. prime focus is to stop Iran from getting nuclear weapons, rather than liberating the Iranian people and promote regime change. Therefore, there will likely be a peace agreement sooner rather than later and more a less a status quo in Iran with reduced military power and limited ability to develop nuclear weapons. After that, Trump will likely focus on U.S. matters and the midterm elections rather than the struggles of the Iranian people. This is a shame, but a geopolitical reality.