K Andy has serious concerns about the deepening trade war with the US, but the escalation between Washington and Iran provides an opportunity to strengthen Beijing's interests.
Of the several strategic partnerships that China has concluded in the Middle East, relations with Iran are the most comprehensive and important. Beijing has similar deals with Saudi Arabia and the United Arab Emirates – two of Iran's most hostile countries – but the Iranians are a good bet for Chinese interests and a vital investment for China.
One of the reasons why the relationship with Iran is so important is the fact that China has a bigger role here and the deal is not between equally strong countries. China is Iran's largest trading partner, supplying and consuming more than 30% of imports and exports. On the other hand, the situation is different: trade with Iran represents less than a percentage of China's exports. Tehran needs Beijing, but for Iranian leaders the Iranians are a substitute partner. It is for this reason that Iran's value to China is now getting bigger because of the escalation with the United States and the emergence of a conflict situation.
Analysts see at least four reasons why China is looking at Iran at the moment.
On first place, Iran is the only major Middle East oil exporter that the Chinese are sure will continue to deliver oil in the event that US pressure increases. Americans are strongly tied to the Gulf Cooperation Council – the local unification of Arab Gulf states, who also have contacts with China – and because Washington supplies weapons and military power to these countries, they are obliged to the United States. Iran is not bound by such relations.
On this one, I agree with Xi. "China's Xi warns of 'stupid,' 'disastrous' clash of civilizations' https://t.co/Spy7VO4ADe via @politico
– Michael McFaul (@McFaul) May 16, 2019
Secondly, China intends to win a lot from Iran. The country is a major investment opportunity for Chinese companies. Many countries avoided serious engagement because of US pressure, and this exacerbated the isolation of Tehran. However, Chinese investors see potential especially because of Iran's mineral resources, a high educated population, and a strategic location in West Asia. There is no need to mention that the country is a vital post for building the Chinese New Silk Road to Europe. The fall in local currency also makes investments appealing to China.
Ironically, China's Iranian deals will also help make money in the Gulf of Saudi Arabia and the UAE, which are trying to limit Beijing's relations with Tehran. Saudis export more oil to China than Iran. Any strengthening of the Chinese presence in Iran will lead to more efforts in the other Middle East countries to partner with Beijing.
Third, growing tensions with Iran divert US attention from the Pacific. As the US fought in Iraq and Afghanistan in the 2000s, China extended its military operations to the South China Sea, and Chinese trade and diplomatic relations covered every corner of Asia. The desire of the US Command to keep carrier aircraft in the Persian Gulf means that Washington will be less focused on China.
Fourth, but perhaps most importantly, the tensions between the United States and Iran have led to the creation of a gap between the Americans and their allies. The British Army has entered into a controversial dispute with its US counterparts on the necessity of escalation in the Persian Gulf. With the exit of the nuclear deal, Trump hurt the Western Alliance, reinforced in 2015, by efforts to halt Iran's nuclear program. This situation is a very good opportunity for Beijing, which will try to strengthen its ties with anyone who does not believe in the Trump administration policy.
China and America are locked in a new kind of cold war. This one could leave no winners at all. Our cover this week https://t.co/EzBoaffaTB pic.twitter.com/qb6NjYbwxX
– The Economist (@TheEconomist) May 16, 2019
However, it should be pointed out that not everything is pink for China. The outbreak of a conflict between the US and Iran would lead to higher oil prices and, as a major oil importer, it would be a blow to the Chinese economy. Military actions will also urge the US to hurt the links between Beijing and Iran, putting investments at risk.
At the moment, US-Iran relations are exactly what China would like to be. They not only increase Iran's value for China but also strengthen Chinese interests in the long run and in the context of competition with the United States.
The US and Iran have rockets – diplomats are trying to stop a possible conflict
Is it important that the United States withdraw from Syria?
How China moves Russia and the United States to the Middle East and Africa