China's relations with Iran

Thanks to Insights Into Today's Middle East

Since establishing diplomatic relations in 1971, the relationship between China and Iran has significantly deepened, especially in the energy sphere. China remains one of Iran’s strongest allies on the UN Security Council and is a major supplier of technology and other assistance. [1] China has had considerable involvement in Iranian militarisation efforts, including offers of weapons, nuclear technology and capital goods, in exchange for Iranian oil. [2] This suggests a link between energy exchange and China’s support for Iran in the political arena. China has refused to back hard-line economic sanctions against Iran’s nuclear programme, fearing interruption to the flow of energy supplies, which are essential to advancing China’s booming economy. [3]

China on Iran’s nuclear programme:

• From 1984 to 1997, China provided considerable aid to Iran’s fledgling nuclear programme. This assistance included training Iranian scientists, helping construct facilities, direct hardware sales and military aid. China also supplied Iran’s first nuclear reactor in 1991. [4]

• Although no longer providing such assistance, Beijing is indirectly helping Iran’s nuclear programme by refusing to back hard-line economic sanctions put forward by the UN. [5]

• China faces a conundrum about whether to support UN sanctions against Iran’s nuclear programme. China opposes Iran’s goal of acquiring a nuclear weapon for fear of its destabilising effects, but wants to ensure unhindered economic cooperation with Iran in order to enhance its own presence on the world stage. [6]

• By refusing to back robust sanctions, China is effectively ignoring the will of the Security Council and allowing Iran to progress with its nuclear programme. [7]

• Hossein Shariatmadari, a leading conservative theorist and editor of the influential Iranian newspaper Kayhan said: “Sanctions are not effective nowadays because we have many options in secondary markets, like China.’ [8]

• China supported three rounds of limited UN sanctions against Iran for refusing to suspend its nuclear activities, but along with Russia has been reluctant to support more comprehensive sanctions. China and Russia insist that sanctions should only aim at nuclear trade, not general commerce, arms sales or investment in energy projects and other sectors of Iran's economy. [9]

• China is a permanent member of the UN Security Council, a position which gives it the power to veto any international pressure on Iran.

• In September 2004, Zhang Yan, China’s ambassador to the UN, announces: “The Iran nuclear issue should and is completely able of being resolved within the IAEA’s framework, through dialogue, and China is opposed to referring the issue to the UN Security Council.” [10]

• In November 2005, Chinese Foreign Minister Li Zhaoxing tells a news conference in Tehran that sanctions “would only make the issue more complicated and difficult to work out.” [11]

• In January 2007, China’s Foreign Ministry spokesman, Liu Jianchao, says the U.S. should not interfere in China’s relations with Iran. [12]

• In June 2008, China agrees to join the US and other powers in diplomatic initiative to contain nuclear programme, but is reluctant to pursue hard-line economic sanctions and wants only to seek further dialogue.

• On June 18, 2008, US Ambassador to International Atomic Energy Agency, Greg Schulte, arrives in Beijing for discussions on Iran’s nuclear enrichment programme. [13]

• According to Phillip Gordon, a Senior Fellow for U.S. Foreign Policy at the Brookings Institution, Beijing is reluctant to pursue hard-line economic sanctions due to the Chinese Communist Party’s (CCP’s) priorities of maintaining power and social stability. To maintain social stability, China needs consistent economic development, and for economic development, China needs massive amounts of affordable energy to fuel its booming economy. [14] Thus China is reluctant to do anything that would interfere with its energy relationship with Iran.

China’s Ambitions in Iran: Multifaceted

1. Energy Resources

• China’s economy is rapidly expanding as its energy needs grow, fuelling a fierce global competition for energy resources.

• China’s proven oil reserves are due to be depleted in 14 years, so the country is trying to aggressively secure future crude oil supplies. [15]

• China wants to reinforce its relations with Iran and to deepen its presence in Central Asia in order to gain access to energy reserves in the Caspian Sea. [16]

• Securing Caspian energy would help China lessen its dependence on maritime oil imports coming from the Arab countries of the Persian Gulf, thus better securing an uninterrupted flow of oil. [17]

• The importance of energy reserves for China rests on the country's desire to develop its economy, which is the foundation of its attempts to play a stronger role in the international system. [18]

• Nearly 45% of China's crude oil imports come from the Middle East.

• Iran is the second largest oil exporter to China after Saudi Arabia, exporting around $5.8 billion in crude oil along with petrochemical products. [19]

• The International Energy Agency expects that China will be relying on the Middle East for 70% of its oil imports by 2015, up from 44% in 2006.

• The Chinese oil giant Sinopec Group has signed a deal worth $100bn with Iran, known as the “deal of century”. Sinopec is due to buy 250 million tons of natural gas from Iran over 30 years , and will help Iran to develop its giant Yadavaran oilfield in exchange for Tehran's commitment of exporting 150,000 oil barrels per day to China for 25 years at market prices. [20]

• In 2004 China agreed to buy $20 billion in liquefied natural gas from Iran over the next 25 years. [21]

• Iran has the second largest natural gas reserves world-wide, after Russia.

• In December 2004, China became Iran's top oil export market. Iran exports about 300,000 barrels of oil to China, which makes it Beijing's third-largest oil supplier, behind only Angola and Saudi Arabia. [22]

• In April 2007, China replaced the EU as the largest petroleum trade partner with Iran. Asian countries in general are gradually exceeding EU in trade with Iran. [23]

• On January 29, 2008, Chinese Ambassador to Tehran, Xie Xiaoyan, conferred with Kamal Daneshyar, the Head of the Iranian Energy Committee on expansion of mutual cooperation between the two countries in the energy sector. Daneshyar announced Iran will set up 20 nuclear power plants in the coming years, with Chinese cooperation. [24]

• In June 2008, Iran’s Pars Oil and Gas Company (POGC) entered into negotiations with China’s China National Offshore Oil Corporation (CNOOC) to develop North Pars Gas field. The North Pars Gas field is stated to hold 80 trillion cubic feet in natural gas reserves. [25]

• In July 2008, after signing three UN Security Council resolutions designed to sanction Iran for non-cooperation, Beijing announced that it will be pursuing a $70bn plan to develop Iran’s Yadavaran oil field in exchange for 10 million tonnes of liquefied natural gas.

• On July 21, 2008, Iran’s Pars Oil and Gas Company (POGC) and the China National Offshore Oil Corporation (CNOOC) finalised a $70bn (₤35, €47bn) agreement to develop Iran’s Yadavaran oil field in exchange for the supply of liquefied natural gas. [26]

2. Market Expansion

• Beijing is not only interested in the exploitation of Iran's oil reserves. China wants to deepen the presence of its firms in the Iranian market, which could be a good outlet for Chinese exports, products and technology. The development of a strong economy is fundamental for China's external projection of power. [27]

• China's economic initiatives in Iran go far beyond the energy field, including: electricity, dam building, cement plants, steel mills, railways, shipbuilding, motorways, airport infrastructure and metros.

• More than 100 Chinese state companies are operating in Iran to develop ports and airports in the major Iranian cities.

• China has become a major exporter of manufactured goods to Iran, including computer systems, household appliances and cars. [28]

• Trade between Iran and China has grown quickly, increasing from $1.2 billion in 1998 to about $10 billion last year. [29]

• As some European countries have decreased their economic trade with Tehran in response to US pressure, China and other Asian countries have stepped in to fill the void. China has already overtaken Germany as Iran's second largest trading partner (the first being the UAE). 

[30]

• Ali Akbar Salehi, Iran’s former representative to the IAEA, said that China and Iran “mutually complement each other. They have industry and we have energy resources.”

 [31]

3. International counterbalance

• China also has international strategic ambitions, competing with the United States for supremacy in the Middle East. Both countries are competing with the United States in the world system, even though, publicly, Tehran is more aggressive toward the US than Beijing. [32]

• The improving relationship between Iran and China does not mean that their long term interests are the same, but it does mean that, in the medium term, the two states share common aims in the economic and geopolitical spheres. [33]

• China does not want to alienate Washington, while at the same time it is very protective over its energy ties with Tehran. [34]


China, Iran and the Shanghai Cooperation Organization (SCO)

• The SCO is comprised of China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. Formed in 1996 to demilitarise the border between China and the Russia, the SCO has risen in regional prominence, tackling issues of trade, counterterrorism, and drug trafficking.

• Iran won observer status to the SCO in 2005.

• In March 2008, Iran’s Foreign Minister Manouchehr Mottaki officially announced Iran’s bid to join the SCO. [35]

• China and Russia are wary of making Iran a full member on the grounds that Iranian membership could give the SCO more of an anti-American tone. [36]

• S. Frederick Starr, an expert on Central Asia at Johns Hopkins University, has highlighted the negative consequences of Iran joining the SCO: “At a certain point it’ll become so diluted that China’s original interest [in the SCO]—to neutralize its western neighbors—will not have been lost but submerged amid other issues.” [37]

• Iran views the SCO as a potential guarantor of future security, experts say. Membership, for example, could offer Iran shelter from the international pressure put on Tehran to end its uranium-enrichment program. Similar protection was provided to Uzbekistan after the Andijan massacre in May 2005. [38]

Military ties

• Beijing is providing Iran with advanced military technology, including access to improved ballistic missile capability. [39]

• China has played a key role in Iran's missile development, with exports and assistance dating back 20 years. China’s exports and assistance to Iran generally fall into two areas: provision of anti-ship cruise missiles and related technology and technical assistance for Iran's ballistic missile program, as well as some exports of complete ballistic missiles. [40]

• China began exporting missiles to Iran in 1985 during the Iran-Iraq war, when China supplied weapons and military technology to both sides.

 [41]

• In 1986-87 China reportedly transferred HY-2 (Silkworm) anti-ship cruise missiles to Iran, prompting the United States to issue a protest to Beijing and to temporarily freeze American

liberalization of high-technology exports to China.

 [42]

• In 1989 China also sold between 150 and 200 M-7/8610 ballistic missiles to Iran. [43]

• China reportedly assisted Iran's efforts to upgrade its North Korean Scud missiles and has supplied technical and manufacturing assistance to a number of indigenous Iranian missile programs, including the Iran-130 (aka Mushak-120), Iran-700, NP-110, and Zelzal-3

.

• In 1996, when media reports stated that China had transferred advanced C-802 anti-ship cruise missiles to Iran that could trigger U.S. sanctions under the 1992 Iran-Iraq Nonproliferation Act, China vigorously denied the allegation.

 [44]

• In 1996 China reportedly began helping Iran develop indigenous anti-ship cruise missiles based on Chinese designs.

• In August 1996 China and Iran signed a $3 billion deal that included the sale of Chinese ballistic missiles, missile guidance technology (including sensitive gyroscopes), and missile production equipment, according to a CIA report.

 [45]

• Under U.S. pressure, however, China began to curb its missile cooperation with Iran. On January 20, 1998, U.S. Defense Secretary William Cohen received personal assurances from Chinese President Jiang Zemin and Defense Minister Chi Haotian that China had halted transfers of anti-ship cruise missiles to Iran and Beijing would not help Iran to upgrade its current cruise missile inventory.

[46]

• Iran and North Korea reportedly worked together to improve the accuracy of the Chinese C-802, an anti-ship cruise missile with a range of 80 miles that Iran bought from China during the mid-1990s. Tehran purportedly received about 150 C-802 missiles. However, China suspended the C-802 sale under U.S. pressure. 

[47]

• In another development, the Washington Times reported that China signed an $11 million contract with Iran to upgrade Iran’s FL-10 anti-ship missile. [48]

• In April 2004, despite China's application to join the Missile Technology Control Regime (a voluntary group of 34 countries that share the goal of non-proliferation of unmanned delivery systems capable of delivering weapons of mass destruction), the State Department sanctioned five Chinese companies, including Norinco and the China Precision Machinery Import/Export Corporation, for transferring cruise and ballistic missile components and technology to Iran.

• In August 2007 the leaders of China and Iran, along with Russia, said that Central Asia should be left alone to manage its stability and security, in an apparent warning to the United States to avoid interfering in this strategic, resource-rich region. The threat came at a meeting of the Shanghai Cooperation Organization

. [49]

• Gary Milhollin, director of the Wisconsin Project on Nuclear Arms Control, spoke before the Senate Foreign Relations subcommittee on Near East and South Asian affairs in May 6 2007. Milhollin pointed to four recent Chinese technology transfers to Iran: anti-ship missiles, air surveillance radars, a fusion reactor and a uranium prospecting operation. 

[50]

_____________________________________________________________

References:

[1] Blair, David, “UN approves fresh sanctions against Iran”, The Daily Telegraph, March 4, 2008,
http://www.telegraph.co.uk/news/worldnews/1580585/
 UN-approves-fresh-sanctions-against-Iran.html

[2] McLaughlin, Kathleen, “Centuries-old partnership binds China, Iran together” San Francisco Chronicle, September 18, 2006,
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2006/09/18/MNGJPL7MQ41.DTL

[3] MacAskill, Ewan, Nick Paton Walsh and Robert Tait, “Top-level talks over Iran crisis expose West's split with China”, The Guardian Weekly, January 20, 2007, 
http://www.guardian.co.uk/guardianweekly/story/0,,1689211,00.html

[4] Nuclear Threat Initiative report mentioned in McLaughlin, Kathleen, “Centuries-old partnership binds China, Iran together” San Francisco Chronicle, September 18, 2006,
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2006/09/18/MNGJPL7MQ41.DTL

[5] Walker, Sophie, “China breaks ranks over tougher sanctions on Iran”, The Irish Times, November 17, 2007,
http://www.irishtimes.com/newspaper/world/2007/
1117/1194550603655.html

[6] Shen, Dingli, “Iran’s Nuclear Ambitions Test China’s Wisdom”, The Washington Quarterly, Spring 2006, pp.55-66, http://www.twq.com/06spring/docs/06spring_shen.pdf

[7] “China says no to nuclear sanctions on Iran”, Agence France Presse, October 30, 2007, retrieved online from
http://www.centurychina.com/plaboard/archive/3786637.shtml

[8] Shariatmadari, Hossein quoted in Wright, Robin, “Iran's New Alliance With China Could Cost U.S. Leverage”, The Washington Post, November 17, 2004,
http://www.washingtonpost.com/wp-dyn/articles/A55414-2004Nov16.html

[9] Richardson, Michael, “Middle East balancing act is becoming harder for China”, The Canberra Times, July 28, 2008,
http://www.canberratimes.com.au/news/opinion/editorial/general/
middle-east-balamcing-act-is-becoming-harder-for-china/1228193.aspx

[10] Zhang Yan, quoted in “Chin’s Energy Needs and Central Asia”, National Observer, June 22, 2006,
http://goliath.ecnext.com/coms2/gi_0199-5472099/China-s-energy-needs-and.html

[11] Sui, Cindy, “China Faces Dilemma over Iran standoff”, Agence France-Presse, January 14, 2006, retrieved online from
http://www.uofaweb.ualberta.ca/chinainstitute/nav03.cfm?nav03=44158&nav02=43873&nav01=43092

[12] Jianchao, Liu “Normal relations, normal cooperation should not be interfered [with].” Quoted in Schearf, Daniel, “China Tells US Not to Interfere in Relations with Iran”, Voice of America, January 11, 2007,
http://www.voanews.com/tibetan/archive/2007-01/2007-01-11-voa5.cfm

[13] “Iran: US envoy in China to discuss Iran's nuclear ambitions”, Thai News Service, June 18, 2008,
http://www.uofaweb.ualberta.ca/chinainstitute/nav03.cfm?nav03=80222&nav02=57594&nav01=57272

[14] Gordon, Phillip, “It Would Benefit Beijing to Be Tougher on Tehran”, The Financial Times, July 9, 2008,
http://www.brookings.edu/opinions/2008/0709_iran_gordon.aspx

[15] Wright, Robin, “Iran's New Alliance With China Could Cost U.S. Leverage”, The Washington Post, November 17, 2004,
http://www.washingtonpost.com/wp-dyn/articles/A55414-2004Nov16.html

[16] Cristiani, Dario,“China and Iran Strengthen their Bilateral Relationship”, PINR, October 6, 2006,
http://www.pinr.com/report.php?ac=view_report&report_id=566&language_id=1

[17] Ibid.

[18] Ibid.

[19] “Iran-China trade hit $9.2b in 2005”, Mehr News Agency, September 7, 2006,
http://www.payvand.com/news/06/jul/1078.html

[20] Fernandez, Yusuf, “Iran and China to Strengthen Cooperation”, July 27, 2008, Press TV,
 http://www.presstv.ir/detail.aspx?id=64942§ionid=3510303

[21] Wright, Robin, “Iran's New Alliance With China Could Cost U.S. Leverage”, The Washington Post, November 17, 2004,
http://www.washingtonpost.com/wp-dyn/articles/A55414-2004Nov16.html

[22] Fernandez, Yusuf, “Iran and China to Strengthen Cooperation”, July 27, 2008, Press TV,
http://www.presstv.ir/detail.aspx?id=64942§ionid=3510303

[23] “China Surpassed EU in Oil Trade with Iran”, SinoCast China Business Daily News, April 21, 2008,
http://www.uofaweb.ualberta.ca/chinainstitute/nav03.cfm?nav03=76726&nav02=57594&nav01=57272

[24] “Iran, China to expand cooperation on nuclear power plant”, BBC, January 29, 2008, retrieved online at
http://www.uofaweb.ualberta.ca/chinainstitute/nav03.cfm?nav03=72561&nav02=57594&nav01=57272

[25] Taghavi, Roshanak, “Iran In Talks With China's CNOOC On Gas Field Devt”, Dow Jones International News, June 29, 2008, retried online at
http://www.uofaweb.ualberta.ca/chinainstitute/nav03.cfm?nav03=80979&nav02=57594&nav01=57272

[26] “Iran, China to Cement Cooperation”, IMRA, July 28, 2008,
http://www.imra.org.il/story.php3?id=40085

[27] Cristiani, Dario,“China and Iran Strengthen their Bilateral Relationship”, PINR, October 6, 2006,
http://www.pinr.com/report.php?ac=view_report&report_id=566&language_id=1

[28] Wright, Robin, “Iran's New Alliance With China Could Cost U.S. Leverage”, The Washington Post, November 17, 2004,
http://www.washingtonpost.com/wp-dyn/articles/A55414-2004Nov16.html

[29] Goodman, Peter, “China Rushes Toward Oil Pact with Iran”, The Washington Post, February 18, 2006,
http://www.washingtonpost.com/wp-dyn/content/article/2006/02/17/AR2006021702146.html

[30] Warren Strobel quoted in “Iran, China to Cement Cooperation”, IMRA, July 28, 2008,
http://www.imra.org.il/story.php3?id=40085

[31] Wright, Robin, “Iran's New Alliance With China Could Cost U.S. Leverage”, The Washington Post, November 17, 2004,
http://www.washingtonpost.com/wp-dyn/articles/A55414-2004Nov16.html

[32] Cristiani, Dario, “China and Iran Strengthen their Bilateral Relationship”, PINR, October 6, 2006.
http://www.pinr.com/report.php?ac=view_report&report_id=566&language_id=1

[33] Ibid.

[34] Sui, Cindy, “China Faces Dilemma over Iran standoff”, Agence France-Presse, January 14, 2006, retrieved online from
http://www.uofaweb.ualberta.ca/chinainstitute/nav03.cfm?
nav03=44158&nav02=43873&nav01=43092

[35] “Iran announces it is seeking membership in the Shanghai Cooperation Organization”, International Herald Tribune, March 24, 2008,
http://www.iht.com/articles/ap/2008/03/24/asia/AS-GEN-Tajikistan-Iran-SCO.php

[36] Beehner, Lionel and Preeti Bhattacharji, “The Shanghai Cooperation Organization”, April 8, 2008, The Council on Foreign Relations,
http://www.cfr.org/publication/10883/#7

[37] Ibid.

[38] Ibid.

[39] Shuja, Sharif, “Warming Sino-Iranian Relations: Will China Trade Nuclear Technology For Oil?, July 23, 2005,
http://www.uofaweb.ualberta.ca/chinainstitute/nav03.cfm?nav03=44166&nav02=43873&nav01=43092

[40] “China’s Missle Exports and Assistance to Iran”, NTI, September 25, 2003,
http://www.nti.org/db/china/miranpos.htm

[41] Ibid.

[42] Kan, Shirley, “Chinese Proliferation of Weapons of Mass Destruction: Current Policy Issues,” CRS Issue Brief, October 17, 1996, p. 5; Gordon Jacobs and Tim McCarthy, “China's Missile Sales—Few Changes for the Future,” Jane's Intelligence Review, December 1992, p. 560.

[43] Reuters, October 12, 1994; In Executive News Service, October 12, 1994; Defense News, October 17-23, 1994, p.64; Douglas Waller, et al., “Sneaking in the Scuds,” Newsweek, June 22, 1992, pp. 42-46; “China Deepens Arms Relationship with Iran,” Iran Brief, October 1, 1996, p. 2; Gordon Jacobs and Tim McCarthy, “China's Missile Sales — Few Changes for the Future,” Jane's Intelligence Review, December 1992, p. 560

[44] “China’s Missle Exports and Assistance to Iran”, NTI, September 25, 2003,
http://www.nti.org/db/china/miranpos.htm

[45] The Iran Brief, October 1, 1996, p.4; and December 5, 1996, p.6; Al-Sharq Al-Awsat (London), August 29, 1996; in FBIS-NES-96-169, August 29, 1996.

[46] “China's President Assures Cohen on Iran Missile Sales,” Reuter, January 20, 1998; John Pomfret, “Cohen Hails Achievements In China Visit,” Washington Post, January 20, 1998, p. A-11; Bill Gertz, “China to Halt Missile Sales to Iran,” Washington Times, January 20, 1998, p. 1; Department of Defense News Briefing, January 20, 1998.

[47] Evans, Michael, “Tehran Upgrades Chinese Missile,” The Times (London), January 11, 2000.

[48] Gertz, Bill, “China Agrees to Deal With Iran on Missiles,” The Washington Times, August 19, 1999. p. 1.

[49] Saralayeva, Leila, “Russia, China, Iran Warn U.S. at Summit”, August 16, 2007,
http://www.washingtonpost.com/wp-dyn/content/article/2007/08/16/AR2007081601221.html

[50] Gary Milhollin, quoted in Marshall, Rick, “Hearing on Exports of Military Technology to Iran”, United States Information Agency, May 6 ,2007,
http://www.fas.org/news/iran/1997/bmd970507b.htm

U.S. President George W. Bush said, "the United States "stands in firm opposition" to China's detention of political, human rights and religious activists, "  and 'urged China to trust its people with greater freedom, saying that is the only way for China to develop to its full potential.'  China responded to President Bush by basically telling him to but out. 

The Chinese Foreign Ministry said it opposed what it called "any words or acts" that interfere in internal affairs. It said China's people enjoy a range of freedoms.  (VOA)

The Chinese probably have the same view of any complaints registered concerning their relationship with Iran.