Despite their apparent partnership, the solidity of China and Iran’s alliance is overemphasized. Recent developments associated with U.S. foreign policy suggest that Sino-Iranian relations are growing weaker since the United States exited the Joint Comprehensive Plan of Action (JCPOA) and reinstated economic sanctions on the Islamic Republic of Iran. It also shows that China does not consider Iran to be an essential ally.

Leaked to the New York Times in July 2020, the Iran-China twenty-five-year cooperation program was presented to President Hassan Rouhani by Chinese President Xi Jinping during his last visit to Tehran in January 2016. Aiming to enhance bilateral political, economic, and cultural cooperation for the next twenty-five years, this eighteen-page draft mentions a $400 million Chinese investment toward the improvement of Iranian gas and oil transportation infrastructure. It also designates Iran as China’s continuous oil supplier for the next twenty-five years, the latter of which will benefit from discounted prices.

As highlighted by the four-year interlude between Xi’s proposal and Rouhani’s approval of the deal in July 2020, talks over this partnership were slow. In fact, they only accelerated after Donald Trump exited the JCPOA and reimposed severe sanctions on Iran. Coupled with the overt success of Chinese investments in Israel and other GCC countries, its ailing economy motivated Iran to “look East,” establishing China as its political and economic alternative to the West. While neither party has yet signed this agreement, the project demonstrates China’s efforts at expanding its influence in the Middle East. If implemented, this cooperation program would undermine efforts made by the former U.S. administration to isolate Iran for pursuing its military and nuclear ambitions.

Since opening its economy to the West, China has adopted a policy of non-involvement in the Middle East. By refusing to intervene in conflicts or engage with regional politics, including the Iran-Israel rivalry, China has maintained cordial relations with the majority of Middle Eastern countries. In turn, it uses its neutrality to seek regional partnerships and advance its Belt and Road Initiative (BRI), a large-scale infrastructure project that would pass through and link East Asia to the Middle East. Focused on the successful completion of the BRI, Xi signed Comprehensive Strategic Partnership deals with Egypt (2014), Israel (2017), the United Arab Emirates (2018), and Saudi Arabia (2019). Last month, the Shanghai International Port Group (SIPG) also acquired rights to operate in the Port of Haifa until 2046.

Once again underlining China’s economic expansionism, the myriad collaboration deals concluded between Xi and Iran’s rivals enable China to play on both sides of the fence. Most importantly, securing its position within the two competing regional blocs allows China to remain the region’s top investor. It also confirms that Iran no longer stands as its main partner in the Middle East. In other words, China’s partnership with Iran is strategic and conservative: if the latter comes to represent an obstacle to its interests, China most likely won’t hesitate to oust Iran. Stripped of any ideological affinity, their relationship shifts and adapts to China’s economic ambitions and/or to international pressures. For this reason, Iran should be considered as an important pawn in China’s BRI rather than a major and definite ally. In the last couple of years, their relationship has been highly affected, if not shaped, by former U.S. President Donald Trump’s decision to reinstate the sanctions lifted under the JCPOA against Iran in November 2018.

Although China has publicly expressed its support for Iran on numerous occasions, Trump’s punitive crusade against Iran was sufficient to dissuade China from maintaining previous levels of investments. In fact, numbers released by the General Administration of Customs (GAC)—a government agency responsible for all trade-related activities within the People’s Republic of China—show a severe decline in trade after November 2018. Between January 2017 and September 2018, China imported an average of 655,000 barrels per day (BDP). By October 2018, China's purchases of Iranian oil had decreased by 55 percent. A similar scenario unfolded for non-oil imports which, between January 2018 and December 2018, fell by nearly 52 percent. Far from resuming profitable trading activities, the U.S. Department of Commerce blacklisting several Chinese companies for importing Iranian oil further encouraged China to limit its financial engagement in Iran.

For the first time in eight years, Chinese imports of Iranian oil dropped to zero in June 2020 while China’s crude U.S. oil imports reached 396,746 BDP. According to the GAC, 2020 simultaneously witnessed Iran’s exit and the U.S. entry into China’s top crude oil suppliers list. In addition to introducing doubts regarding China’s ability to resist U.S. sanctions, this indicates that Beijing does not prioritize its relations with Tehran but is rather focusing on privileging its fragile ties with Washington. Today, China considers that siding with Americans is more profitable than maintaining high levels of investments in Iran. Of course, Sino-Iranian relations are not extinct, but our current context suggests that the chances of Xi backing Iran if a crisis erupts in the near future are slim.

Since Joe Biden announced that the United States could rejoin the JCPOA, which entails alleviating its economic sanctions, Iran has grown hopeful that its economy will recover. Indeed, if he chooses to relax some of the penalties imposed by his predecessor, a favorable trading environment for China and Iran will resurface. Market sources expect this will increase Iran’s financial inflow and reinforce its ties with its Eastern patron. Nonetheless, this certainly won’t be immediate. In an interview with CBS Evening News, Biden made it clear that the United States will not return to the deal nor will it lift sanctions unless Iran agrees to resume full compliance to the terms of the 2016 nuclear deal.

Often portrayed as allies against the United States in the Middle East, the bond uniting Iran and China is exaggerated. Concerned with the completion of its BRI, Beijing has made sure to extend its influence outside of Iran, reducing Tehran’s role to that of a moderately-influential ally. Guided by its self-interest, China also redirected its investments from Iran to the United States as soon as former President Trump reinstated economic penalties on Iran. This is to say that their relationship is highly strategic and is much affected by China’s economic interests and/or external pressures. 

Victoria Courcier is a junior analyst at Le Beck International. 

Image: Reuters.