A 25-year agreement between Iran and China, following the signing of a comprehensive strategic partnership in 2016, has recently sparked much discussion. The Wall Street Journal referred to the agreement as the sign of an Iran-China axis in the making, while IranWire, a London-based media outlet run by Iranian journalists in the diaspora, described it as Iran becoming China’s client state. Such claims appear to be vastly exaggerated. While there are potential regional implications in the China-Iran deal for the Gulf Arab states, the agreement will not be a turning point for the region.
The strategic partnership agreement will most certainly have an impact on Beijing’s broader Gulf strategy, as well as Chinese ties with the Gulf Arab states, and will give Beijing an even stronger foothold in the region. Yet, the deal will not reconfigure the region’s power distribution or undermine the United States’ strategic supremacy in the Gulf in the long term.
While the agreement may have the potential to be a stepping stone to increased ties between Tehran and Beijing, its current form – a leak of the final draft of the document has circulated widely in the last few weeks – does not depart much from the roadmap publicly agreed upon between the two countries in 2016. According to the draft document, the scope of the agreement remains tied to a comprehensive strategic partnership, which promotes cooperation ranging from infrastructure development to broadening financial and economic ties. The military section of the agreement presents equally broad objectives, such as the establishment of a joint commission for military industries and production of armaments.
While these aspects look more beneficial to Tehran than to China, Beijing will bolster its status as one of the few regular buyers of Iran’s oil, as well as increasing its footprint in the Iranian economy. However, the draft document does not include details about the implementation mechanisms nor establish clear deadlines and budget allocations. So, while China and Iran may have agreed on a comprehensive scheme, it will take more work for the effective realization of joint projects.
Iran’s Gravitation to China
Iran has not sought to expand its ties with Beijing exclusively in response to international isolation. The two countries defined the framework of the comprehensive strategic partnership in January 2016, when Iran was focused on rebuilding its economic ties with the West. At that point, China was a potential important source of diversification for Tehran in the aftermath of the implementation of the Joint Comprehensive Plan of Action nuclear deal. Meanwhile, in the past two decades, China has increased its footprint in the region, cutting deals and establishing partnerships with all the Gulf states, prioritizing investments and economic ties.
Notably, after a three-year delay during which the negotiations did not move from the 2016 roadmap, Tehran relaunched negotiations in August 2019, when Iran’s foreign minister, Mohammad Javad Zarif, visited Beijing presenting the first draft of the 25-year comprehensive agreement to his Chinese counterpart. This came amid Iran’s increasing isolation due to the effects of Washington’s “maximum pressure” strategy and Tehran’s aggressive actions in the Gulf. If anything, U.S. sanctions have sharpened Tehran’s need to present Beijing as a solid partner, increasing the political significance of a long-term, comprehensive deal. On the other side, as Bourse & Bazaar founder Esfandyar Batmanghelidj wrote, one reason for Iran’s tilt toward China is that Tehran “has been largely left out of a decade of aggressive Chinese investment in developing economies worldwide.”
Overall, Iran appears rationally pulled toward China by the latter’s economic power, an attraction shared by the Gulf Arab states, and, thus, not just a consequence of Washington’s “maximum pressure.” But President Donald J. Trump’s Iran policy worked as a push factor, enhancing the political and strategic weight for Iran of the deal with Beijing.
China’s Delicate Balancing Act: Between Riyadh and Tehran
The China-Iran deal sparked wide discussion in international media, suggesting it has greater significance than it actually does. First and foremost, Iran is not the only country in the region to have a comprehensive strategic partnership with China; Gulf Arab states such as Saudi Arabia (since 2016) and the United Arab Emirates (since 2018) do as well.
According to the China Global Investment Tracker, Beijing invested up to $62.55 billion in Saudi Arabia and the UAE between 2008 and 2019. The total amount that China invested in all the Gulf Cooperation Council countries during the same period reaches up to $83 billion. China has invested some $10.7 billion into transforming an Omani fishing village into the Special Economic Zone Authority of Duqm. It has also signed a $300 million deal with the UAE to develop a manufacturing operation in the free trade zone of Khalifa Port. China’s shipping company COSCO had already won the right to develop and operate a new container terminal at the same port for 35 years at a total cost of $738 million. These investments are all part of China’s Maritime Silk Road project for which the Gulf Arab states are a strategic hub. Similar investments were made in Oman, providing financial support to Hamad Port and the planned community Madinat Al Hareer, or Silk City, in Kuwait. China is also reportedly discussing high technology investments in Bahrain.
Furthermore, shortly after the details of the deal were leaked, the ninth China-Arab States Cooperation Forum Ministerial Meeting was held in July. Meeting virtually, the foreign ministers of all the Arab League states and their Chinese counterparts signed the Amman Declaration, expressing the desire of China and Arab states to deepen relations.
Current discussions around the China-Iran deal notwithstanding, the Gulf Arab states remain integral to Beijing’s economic projection in the Middle East. China will not cast aside these partnerships in favor of its bilateral ties with Iran but remains keen to balance its relations with the regional powerhouses. By avoiding direct involvement in regional skirmishes, China is able to expand its economic and military activities in a highly competitive environment without being bogged down in the turmoil of political and security conflicts.