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Chinese Foreign Minister Wang Yi completed a six-country tour of the Middle East March 30. Despite a flurry of initiatives, the news that caught everyone’s attention was the signing of an agreement with Iran that is expected to strengthen Beijing and Tehran’s cooperation on economic and strategic issues. Naturally, many countries in the Middle East see this as a troubling development. But looking at the overall picture shows that this is not as much a cause for alarm as it might initially seem.
First, the agreement between Iran and China is not a deal – it is a framework for cooperation. There are not any specific details in the document, despite leaked reports of a $400 billion Chinese investment commitment. When asked about the agreement during his press briefing, Chinese Foreign Ministry Spokesperson Zhao Lijian described it as a plan “charting course for long-term cooperation. It neither includes any quantitative, specific contracts and goals nor targets any third party.”
Another important point is that this is not a new development. China and Iran first announced that they were establishing a comprehensive strategic partnership during President Xi Jinping’s January 2016 visit, with an ambitious goal of increasing bilateral trade from a modest $32 billion that year to $600 billion by 2026. The reality is that trade between the two countries has consistently been decreasing since as a result of U.S. sanctions against Iran, and there has been no move toward deeper trade relations. China’s economic relationship with the United States is much more important than a partnership with Iran, and Beijing has demonstrated time and again that it will not risk damaging its ties with Washington for the sake of business with Iran.
The U.S. angle is the most important consideration here. China’s partnership with Iran was established immediately after the 2015 Joint Comprehensive Plan of Action was signed. During President Donald J. Trump’s 2016 campaign he frequently referred to the JCPOA as “the worst deal ever negotiated” and stressed that as president his first priority would be “to dismantle the disastrous deal with Iran.” He also campaigned on a very aggressive China policy. When he was elected it became obvious that the United States was going to leave the nuclear deal, and, as a result, China’s outreach to Iran cooled dramatically. After four years of steady deterioration, the China-U.S. relationship is on the rocks and the China-Iran relationship is warming up again. This is not a coincidence. This looks like a move from Beijing to increase Iran’s value as a bargaining chip in its dealings with the United States.
Some fear that the China-Iran comprehensive strategic partnership provides Chinese support for Iran’s belligerent foreign policy, but the prospect of an Iran with nuclear weapons capability worries Beijing. The administration of President Joseph R. Biden Jr. held its first talks with China on March 18 and 19 in Anchorage, Alaska. At the meeting, both the Chinese and U.S. delegations reportedly agreed that the Iran issue is one on which they could work together, and Vice Foreign Minister Ma Zhaoxu expressed concern that “there are some new changes in the current Iranian nuclear situation. All parties should increase their sense of urgency.”
So what changed in a week? The opening remarks at the Alaska summit showed how far apart the United States and China are right now. On top of that, the United States has placed sanctions on Chinese officials, and Biden has put China front and center of his foreign policy, stating “we’ll confront China’s economic abuses; counter its aggressive, coercive action; to push back on China’s attack on human rights, intellectual property, and global governance.” The Biden administration’s focus on values in its foreign policy and commitment to work with other democracies puts China in a difficult position. Beijing did not have to worry about its declining relations with Western democracies during the Trump administration because values and allies’ concerns did not feature significantly in the U.S. approach to China. Now a broad and like-minded coalition is taking shape, putting China at odds with its largest trading partners, the United States and the European Union. Chinese leaders needed to show their domestic constituents that they have options, so since the Alaska summit, Russian Foreign Minister Sergei Lavrov visited Beijing and then Wang made his Middle East trip. It is no coincidence that all of these states are uncomfortable with the direction of U.S. foreign policy under Biden.
The central question about the China-Iran agreement is whether it represents a significant change, and when considering the big picture, it appears it does not. However, China’s former ambassador to Iran, Hua Liming, would disagree; he referred to it as a “momentous change” and claimed that China had long kept Iran at arm’s length to placate Washington, but “with fundamental changes in China-US relations in recent months, that era has gone.” But such remarks from a former Chinese ambassador should be expected. The reality is that the China-U.S. relationship has not yet fundamentally changed. It is certainly at its lowest point in decades but Ryan Hass’ description of competitive interdependence is important – the two countries are deeply intertwined after years of growing economic engagement, and, despite rhetoric about decoupling, both sides are aware of the importance of getting this bilateral relationship right. They are each other’s largest trading partner. Contracting and investment in the United States since 2005 is valued at nearly $190 billion for China. Beijing is not going to jeopardize that for stronger ties with an Iran of marginal economic and political value.
For Gulf Arab states the agreement may be worrying, but a similar logic still applies here. China’s trade, contracting, and investments are deep and broad with the Gulf Arab states, while they are shallow and narrow with Iran. China’s Middle East interests are largely commercial, so it is unreasonable that Beijing would risk its more valuable relationships with the United Arab Emirates and Saudi Arabia for the chance to make a quick buck with Iran, assuming it could avoid sanctions. The UAE and Saudi Arabia also have comprehensive strategic partnerships with China. The one with Saudi Arabia was signed just days before that with Iran, and the one with the UAE was signed during Xi’s 2018 visit. The Iran partnership has been stalled for five years. Meanwhile, the partnership with Saudi Arabia has been implemented and steadily developing. The partnership with the UAE has been incredibly dynamic in the three years since it was signed, evident in the announcement in late March of a joint venture between China’s Sinopharm CNBG and the Abu Dhabi-based Group 42 to produce up to 200 million doses of the Sinopharm coronavirus vaccine in the UAE. Again, Beijing is not going to throw away years of diplomatic and political capital for a deal with Iran, a country with few useful allies.
Finally, it’s not necessarily a bad thing for China and Iran to deepen their relationship. Both the UAE and Saudi Arabia have mature, interest-based partnerships with China. This is an opportunity to have some positive super-power influence in Tehran. The Iran-China relationship is fundamentally asymmetrical; Iran desperately needs China, giving Beijing unmatched leverage in Tehran. Emirati and Saudi partnerships with China can be a useful diplomatic tool to try to change Iranian behavior.
It’s natural to see this deal as a reason for concern, but in the bigger picture, it does not alter the regional balance of power, and it does not take anything away from the Gulf Arab states. It could in fact provide opportunities for creative diplomacy.
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