China & Iran: Looking into Complementarities
When one looks at China-Iran relations, one can easily conclude that their relations very well fits the famous proverb 'my enemy's enemy is my friend'. China-Iran relation is a classical case of balancing. Despite the lack of commonalities in the cultural, ideological or religious sphere, Iran & China have come a long way. Balancing is the premise of the current situation between the two nations. Both Beijing & Tehran see each other as an essential ally to balance America, especially in the Middle East. Their relationship had travelled quite a distance since the Shah's reign when it had little importance.
Under western pressure, Iran could not make any significant overtures. After establishing the Islamic Republic, the Chinese were quick to grab the opportunity to improve their relations. They extended the recognition to the new Islamic Republic within three days of its formation. However, the Iranians looked at the Chinese with some suspicion on the pretext of their interaction with the Shah. With Beijing's effort & evolving circumstances of those times, the relations saw a gradual upswing. Some of the factors which helped both Iran & China to improve their relations are Iran's isolation on the world stage after the Islamic revolution, China's energy needs & the need for cooperation for economic development. Both countries have been able to navigate the challenges, mainly the western pressure to build robust relations & expand it to the strategic level. In March 2021, Tehran & Beijing signed a 'twenty-five years strategic cooperation agreement'.
Political Understanding
The one common thread in the worldview of both China & Iran is the United States. Reasons are different, but the omnipresence of America in their respective outlook is ineluctable. American has been the most significant point of convergence, but sometimes it has also been the cause of irritation in the China-Iran relationship. Iran sees the US presence in the Middle East as extra-regional. The American presence & sanctions have constrained the Iranian ambitions of being a regional power. Chinese views are very similar. They, too, see the American presence in the Indo-Pacific as an outsider & challenging the rise of China as the 'Middle Kingdom'. In the late 90s, owing to the American help in its economic growth, China curtailed their cooperation with Iran, especially in the nuclear & military field. The Chinese actions irked the Iranians.
Iran sees the Chinese support as a critical tool of balancing against other nations of the region, notably Saudi Arabia, UAE, Israel, who have the patronage of America. China sees Iran as a stable source of energy supply. It also uses its relations with Iran to signal the US. Nevertheless, China delicately balances its relationship with other players in the region. Iran relies on China for political help, especially at the international forums. Another point of convergence between China & Iran is over Human Rights issues. Both of them brush off this topic under the carpet in the name of non-interference in domestic matters. They label such attempts as western designs to topple their regimes. Since authorities in both nations have gained power through revolution, they are sensitive about their survival. Iran, in some ways, views Chinese help as beneficial for the survival of the regime.
China's indispensability to Iran's development
The sanctions have hamstrung the Iranian economy & the pandemic has made things even worse. With the withdrawal of the American & European investor, Iran's dependency on China has increased manifold. The economic relations between China & Iran has two perspectives, one the Chinese & the other Iranian perspective. One of the facets of the economic dimension is their energy cooperation. China views Iran as a source of energy for its economic growth. Iran is the fourth largest proprietor of oil reserves & the second largest proprietor of gas. Iran is strategically consequential for China vis-a-vis its energy security. Until the last decade, Iran was a net importer of fuel despite possessing such large oil & gas reserves. Due to a lack of refining capabilities, Iran was compelled to import around 40 per cent of its fuel requirements.
However, with the help of Chinese investment, Iran has improved its capabilities & is no longer dependent on fuel imports. Today China is the largest importer of Iranian petroleum. China is also assisting Iran to exploit the potentials of renewable energies such as hydropower, solar, wind & Biomass.
The second prominent strand of economic relations is infrastructure development. Chinese investment is the boat that has kept the Iranian economy floating. China has invested heavily in infrastructure projects in Iran. Iran's geographic location has made it an interesting case for the Chinese. It serves as a gateway to Central Asia for China. China has made investments in rail, steel & port projects; construction of dams, hospitals, highways. In 2016, Iran & China signed an MoU on BRI. Most of the earlier projects were amalgamated under the fold of BRI. The metro network in Tehran & Mashhad was built with Chinese aid. China has also financed a billion-dollar project for the renovation of the capital city of Tehran. Under BRI, China is working on the Tehran-Mashhad railway line.
The trade between Tehran & Beijing would be a classic case of asymmetry. Around 80 per cent of China's imports from Iran is oil & gas. China is also importing other natural resources like iron ore, copper ore, zinc ingot. China's metal & mining products' imports saw an increase of 150 per cent between March & October 2019 compared to the same period in 2018. Iranian imports are mostly finished goods & equipment. China sees Iran as a good market for its cheap products.
However, things are not as rosy as one might think. The reimposition of sanctions had narrowed the economic opportunities between the two countries. Though the bilateral trade between China & Iran ameliorated from $5.6 billion in 2003 to $51.8 billion in 2014, the sanctions dwindled the trade figures. In 2020, the bilateral trade figure stood around $14.9billion. In 2016, during his trip to Iran, President Xi had set an onerous target of elevating the bilateral trade to $600 billion by 2026. For now, this target seems like nothing more than daydreaming.
Military & Nuclear Cooperation
During the long Iran-Iraq war, China was a vital source of arms for Iran to fight the Iraqis. Despite the international isolation, China provided military equipment via third parties when the Soviets & other western powers refused to help. The Chinese gesture greatly influenced Iranian perception of China. Since then, China has been a critical player in Iran's military modernisation. The imprints of Chinese help are very evident in the Iranian defence industry. For example, the missile series of Iran such as Oghab, Nazeat & Shahab III is based on Chinese design & technology. The Chinese have sold Iranians the latest anti-ship mines and fast attack boats. Reports also suggest that China has been a crucial factor in developing Iran's Ballistic Missile Technology. Iran sees its missile & naval capabilities as a deterrence against the Americans to indemnify its weak air power. They are talks of Iran buying Chinese fighter aircraft to overcome its deficiencies in the airpower spectrum. Both the countries have engaged in joint military exercises. They aim to diversify their cooperation their security in countering terrorism, terror financing & organised crimes. In 2016, during the Chinese defence Minister visit, they signed an agreement for military cooperation. They are also cooperating in R&D in the defence field along with educational exchanges. They also hold regular commander level visits as well as high-level military visits.
Also, given Iran's regional ambitions require it to be a strong military power. However, apart from the conventional military methods, Iran's yearning for a nuclear bomb is very well known. China, a well-known proliferator, contributed to Iran's nuclear program. China's contribution to the Iranian nuclear program constituted the majority of the technical expertise and was dual. Apart from the scientific know-how, China helped Iran in the exploration & mining of Uranium. China's benefaction in the establishment of Esfahan Nuclear research Centre & training of the engineers is immense. However, in the late 90s, under US pressure, China withheld its nuclear cooperation with Iran. It led to some ruptures in their relationship. China did not want to antagonise America beyond a point, given their importance to Chinese development. Iran believes that possessing a nuclear weapon will tilt the balance in its favour in the Gulf & counter to American hegemony.
Strategic Partnership
Iran & China signed a 25 year "Strategic Cooperation Agreement" on March 27th, 2021. One who follows this relation or the region, the agreement will not come up as a surprise. There was a report in 2020 in the New York Times about the covenant. The genesis of this accord was embedded in 2016 during President Xi's tour of Iran. The agreement aims to expand the bilateral relationship in the areas of trade & economy, enhance the military & defence cooperation, collaborate more in agricultural & infrastructure projects, and promote tourism. There were reports about China making a $400 billion investment in Iran, but the Chinese foreign ministry has outright rejected such claims & denied putting up a number. The concordat comes when the Iranian economy is struggling to float itself due to the creeping sanctions & not to forget the Covid crisis. China is engaged in a trade war with the US & the churning in their relations have posed many uncertainties in international affairs. The geopolitical angle of the agreement cannot be overlooked. Both China & Iran want to use this accord to signal the United States. Nevertheless, the covenant also highlights Iran's increasing dependence on China.
Conclusion
China-Iran relations started as a strategic balancing and has diversified into other domains, especially the economic sphere. Both of them have developed a barter system to trade to avoid the sanctions. The Iranians supply crude oil & natural gas to the Chinese at a discounted rate in exchange for supplies from China. The military dimension of their cooperation is worth noting. China views a militarily strong Iran works in its favour as it would keep the US engaged in the Middle East. It would veer off the American focus in the Pacific. The Iranian government would like to tout the strategic agreement as an achievement to the domestic audience in the backdrop of a severe economic condition. The Chinese have smartly used the sanctions on Iran as the pretext to deepen their relations. China, in the current situation, is indispensable for the Iranians.
References
- https://www.uscc.gov/sites/default/files/2021-06/China-Iran_Relations.pdf
- https://www.rand.org/pubs/occasional_papers/OP351.html
- https://www.idsa.in/issuebrief/china-iran-strategic-partnership-quamar-priya-300421
- https://green-bri.org/renewable-energy-cooperation-and-investment-and-financing-between-china-and-iran/
- https://www.iiss.org/blogs/analysis/2021/04/china-iran-deal
- https://www.mei.edu/publications/making-sense-iran-china-strategic-agreement
Pic Courtesy-Ling Tang at unsplash.com
(The views expressed are those of the author and do not represent views of CESCUBE.)
