The establishment of a new Comprehensive Strategic Partnership between China and Iran has made headlines, but as Camille Lons and Meia Nouwens explain, Middle Eastern leaders are by no means naïve. While they shake hands with the East, all eyes remain on the West.
The signing of the long-awaited China–Iran 25-year cooperation programme was the crowning achievement of a tour of the Middle East by Chinese Foreign Minister Wang Yi, which included visits to Saudi Arabia, Turkey, Iran, the UAE, Bahrain and Oman, and saw Wang lay out a five-point initiative for the Middle East and propose to host an Israel–Palestine dialogue, as well as a multilateral Gulf security dialogue.
Under discussion since it was first proposed in 2016, the deal had already made headlines in 2020 when the New York Times reported on a draft version of the agreement. This deal would reportedly expand China’s presence across a wide range of sectors, spanning from energy, banking, to telecommunications and infrastructure. It would also offer military cooperation, including joint training, as well as research and cooperation in their defence industries. In return, China would reportedly receive a heavy discount on its supply of Iranian oil for the next 25 years.
While the leaked document did not include specific financial targets or a full breakdown of envisioned projects, news reports claimed that Chinese investments would amount to the (arguably implausible) figure of US$400 billion. This number continues to be mentioned in most news reports covering the recent signing of the deal, triggering concerns in Western countries and in GCC states, but also within Iran, where a significant part of the population fears that the country could become too dependent on Beijing.
The final version of the agreement has not yet been made public, but reports from Iranian and Chinese sources offer different pictures about its content. While Iranian news media have jumped on the story to highlight the depth and breadth of this newly enhanced bilateral relationship with Tehran’s ‘friend of difficult days’, Chinese reporting has offered minimal details. Articles published in Xinhua remain vague, focusing on the diplomatic aspect of Wang’s visit. They have reported on China’s assistance to countries in the region to combat the COVID pandemic, China’s unique position to promote regional peace and stability, proposing an alternative model to US ‘hegemony’, and China’s ‘construction of a new development pattern’ by means of the Belt and Road Initiative. But there has been no mention of the details of the agreement. More strikingly, and in contrast with reports mentioning the US$400bn figure, China’s foreign ministry spokesperson Zhao Lijian has stated that ‘[the plan] does not include quantitative specific contracts or indicators’.
Putting things in context
International experts following China–Iran relations have been unanimously sceptical about the ground-breaking nature of this deal. The idea that China will invest US$400bn in Iran has been shown to be unrealistic. To put things in perspective, this would constitute almost one-third of the estimated investments for the entire Belt and Road Initiative. To date, total current stocks of Chinese foreign direct investment in Iran amount to around US$3bn according to the Chinese Ministry of Commerce, which is slightly more than China has invested in Saudi Arabia, but significantly less than the amount China has invested in countries such as Pakistan, the UAE and Israel. In practice, US sanctions have largely complicated Chinese companies’ ability to do business in Iran, and since withdrawing from the South Pars natural gas project in 2019, Chinese firms have not been involved in any major infrastructure projects in Iran.
On the political and security side, Comprehensive Strategic Partnerships can involve security cooperation elements, including arm sales and joint training, but they should not be understood as military alliances. China is unlikely to step up its regional involvement significantly, nor to prioritise Iran over other regional powers such as Saudi Arabia or the UAE. So far, China and Iran have engaged in limited maritime security exercises, such as the trilateral exercise with Russia in February 2021 – meanwhile China has taken part in similar exercises with other countries of the region. Beijing has not sold UAVs to Iran, as it has to GCC countries, nor partnered on local weapons production, and the lifting of the United Nations arms embargo against Iran in October 2020 has not led to a flurry of Chinese arms purchases.
Of note was Wang’s proposal to host regional security talks on the Gulf region, signalling a slight departure from Beijing’s usual reserve. But China is unlikely to invest the political will necessary to make such talks significant.
All eyes on the US
While the evolution of global geopolitical dynamics is pushing Middle Eastern powers to increasingly look East, both Beijing and Tehran are ultimately seeking to prioritise their relationships with the US and the West.
At nearly US$550bn versus US$30bn (although underestimated because of sanctions), China’s bilateral trade with the US dwarfs its bilateral trade with Iran. Far from being an all-weather partner, Beijing has repeatedly sacrificed its relationship with Tehran for the sake of bigger interests in Washington, such as during the negotiation of the trade deal with the US in early 2020. Beijing has, however, conveniently re-emphasised Middle Eastern partnerships at times when it has needed to boost its standing on the international scene. This time is no different.
China has had a difficult two years in foreign-policy terms. Since 2018, it has faced international criticism (mainly from US-allied countries) about its treatment of Uighurs in Xinjiang, its initial handling of the COVID-19 outbreak in Wuhan and its links to technology giant Huawei. Its increased military assertiveness along its land borders and beyond its territorial waters has also been met with significant pushback. As a result, China finds itself on the coldest terms with the US since the Nixon era. It is thus not surprising that Beijing is eager to highlight its deepening bilateral relationships with both Washington’s allies and enemies.
For Iran’s part, despite the fanfare from political and media commentators about a shift towards Asia, its focus is firmly on the West. Iranian officials see the partnership with China as a way to decrease their isolation on the international scene, and to strengthen their hand ahead of any fresh negotiations on the Joint Comprehensive Plan of Action (JCPOA). But the early months of the JCPOA in 2016 made it clear that Iranian companies favoured partnerships with the West over those with China, and a similar scenario could repeat itself if the US eases sanctions. This deal with China, from Tehran’s perspective, will be greeted with a heavy sense of realism. Though China is an important market for Iranian business interests, Tehran will likely continue to take a pragmatic approach to its relationship with Beijing while strategically looking to improve its relationships with the Western countries.
A natural evolution, not a paradigm shift
As a matter of consequence, the Iran–China deal is unlikely to pose a threat to the JCPOA negotiations or to be conceived as an alternative to Iran’s relations with the West. On the contrary, it is in China’s interest to see a return to the nuclear talks. Although Washington’s maximum pressure campaign has opened some space for Chinese influence in Iran, economic opportunities for Chinese companies remain limited by the sanctions, and Beijing is concerned by Tehran’s nuclear ambitions. It is no surprise then that the announcement of the Iran–China deal was shortly followed by a small breakthrough in the JCPOA negotiations, with the US announcing talks in Vienna for the following week.
Rather than being a game changer, the Iran–China Comprehensive Strategic Partnership reflects the natural evolution of relations between the two countries and parallels similar Chinese engagement with other Middle Eastern powers. While it remains to be seen how this agreement will progress over the next few years, historical evidence suggests that it may underwhelm those expecting to see big shifts in Iran’s foreign and security policies.
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