Economy, Business And Markets

Strengthening China-Iran Partnership

Strengthening China-Iran PartnershipStrengthening China-Iran Partnership

The reintegration of Iran in the world economy represents a critical opportunity for the strengthening of strategic ties between the Islamic Republic and the People’s Republic of China.

Iran represents a vital partner for Beijing’s growing demand for energy and a remarkable bastion for the expansion of Chinese influence in the region.

The main pillar of the economic and strategic partnership between Iran and the China lies in Iran’s abundance of energy resources, an important asset for Beijing’s energy security strategy.

China’s demand for energy has risen dramatically in the last two decades, transforming the country from a net oil importer to the world’s second largest oil consumer, wrote Global Risk Insights.

In the past years, economic growth and industrial expansion have played a major role in ensuring political and social stability in China and strengthening relations with a country rich in resources, like Iran.

As already experienced in Central Asia, with the enhancement of economic and energy partnerships with Central Asian republics, China envisions the creation of extended infrastructural networks based on the Silk Road initiative inaugurated by President Xi Jinping in 2013, in which Iran, given its strategic position, plays a critical role.

Across the region, Iran is expected to grow as an oil supplier. Even as it was economically isolated from the rest of the world, Iran established ties with Chinese state-owned enterprises such as the China National Petroleum Corporation.

From 2003 till 2014, China was not only an important economic partner, but also the most important provider of investment and technology transfer, vital for the Iran’s modernization and economic development.

The removal of sanctions against Iran (imposed by the West over Tehran’s nuclear energy program) will boost Beijing’s capacity to increase the level of heavy crude oil supplied by Iran through the establishment of infrastructure needed to produce and refine it.

Indeed, Beijing’s growing dependency has been an important element in the shaping of economic and diplomatic relations since the early 1990s, foreshadowing the strategic dimension that Beijing’s engagement could represent in the Persian Gulf.

Even during the highest peak of the Washington-Tehran confrontation, China has maintained close partnership with the country, despite pressure from the West.

Coinciding with the lifting of sanctions, the consolidated partnership with Iran provides a significant advantage to Chinese state-owned enterprises, such as CNPC, Sinopec and China National Offshore Oil Company, that will soon rush into the country in an attempt to strike an important deal with the Islamic Republic.

  Strategic Dimension of Sino-Iranian Partnership

Last week, there were rumors regarding Iran’s interest in purchasing 150 Chengdu J-10 fighters from China for a contract value of $1 billion. China has been an important military provider for Iran since the Iran-Iraq war in 1980.

Since the 1980s, Beijing has been an important partner in supplying Tehran with advanced military hardware, including tactical ballistic and anti-ships cruise missiles, and providing critical support for the development and expansion of the Iranian domestic military industry, a keystone of its military modernization.

From a strategic perspective, China’s military support to Iran is part of a strategy that aims to establish the indirect influence of Beijing in the Middle East as the main tool to counter US presence in the Persian Gulf.

In the long term, this could include the expansion of the presence of People’s Liberation Army Navy in the region, in order to secure the sea lines of communications, vital to protect the energy supplies transiting through the Persian Gulf.

In the foreseeable future, a stronger Chinese military presence in the region could be boosted by Iran’s decision to fully join the Shanghai Cooperation Organization once sanctions against Tehran have been completely lifted.

Beijing could play a central role in providing military hardware while also helping Tehran to expand its cyber warfare capabilities.

Despite predictions to the contrary, Iran does not consider China a hegemonic and imperialistic power, and China has never questioned Tehran on its foreign policy, or on other important issues such as democracy, human rights and nuclear non-proliferation. Instead, China has supported Tehran in its military modernization and economic restructuring.

It is difficult, however, to foresee the evolution of a regional scenario in which China strengthens its relations with Iran to increase access to energy sources while also establishing a new influence over the Pacific Gulf.

The US administration’s desire to avoid any entanglement in the region, at the expense of the American strategic commitment over Asia Pacific, leaves room and opportunity for Beijing’s desire to increase its engagement in a region critical to its energy security.