China-Iran Ties: Assessment and Implications for U.S. Policy

Introduction

The China-Iran relationship poses a significant challenge to international efforts to isolate Iran and pressure its leaders to abandon their nuclear program. China has continued to develop tighter ties with the Islamic Republic even as Iranian weapons and facilitators kill Americans in Iraq and Afghanistan, the terrorist activities of Tehran-backed Hamas and Hezbollah threaten Israel, and Iranian centrifuges continue to enrich uranium. China continues to provide weapons to Iran, maintains extensive economic relations with it, and protects the Iranian regime at the United Nations Security Council. All of these activities have contributed to the ineffectiveness of Washington’s policies toward Iran. Although Chinese support for the Iranian regime has certainly frustrated American leaders, it has not harmed U.S.-China relations. China has offered Iran as much support as it can get away with without bringing reprisals upon itself.

China appears to see Iran as “a useful hedge against a hostile United States.”[1] The relationship is mutually beneficial. Iran’s economy is well served, as are its political and strategic objectives in the region. Meanwhile, Beijing can use Tehran to keep the United States bogged down in the region, and to demonstrate its ability to frustrate U.S. policy outside of the Asia-Pacific. China is not eager to go toe-to-toe with the United States; using Iran, Beijing can assert its leadership and demonstrate that its power rivals that of the U.S. without directly challenging American leadership in the Asia-Pacific.

The China-Iran relationship is problematic for the United States not only because it frustrates Washington’s Iran policy, but also because the ultimate outcome of the Iran challenge has wider consequences for U.S. global leadership and credibility.

PRC-Iran Relations: An Overview 

There are both sentimental and pragmatic reasons for close China-Iran relations. There is an undercurrent of historical links in their relations, which provides the two countries a base upon which to further develop their growing ties. Both are home to two of the world’s most ancient civilizations: civilizations that have been connected in one form or another since the opening of the Silk Road in the second century B.C.[2] 

Not only do they share a common history, but they also share a sense of victimization and “humiliation”[3] by the West, and “a sense of systematic exclusion from the regional or global power politics by the great powers.” [4] The victim narrative continues to play an important role in the rhetoric of each country’s leadership, and thus provides a common point of reference for Sino-Iranian relations.[5]

China and Iran are both revisionist states, profoundly suspicious of the U.S.-dominated world order and working toward the emergence of “a multi-polar world in which American influence is diluted.” [6] During a 1991 visit to Iran, Chinese premier Li Peng spoke to the Iranian media on this point: “We are against the domination of the U.S. or of a minority over the world, and against the creation of the new order by the U.S. in international relations, and we are in complete agreement with the Islamic Republic of Iran on this point.”[7] Hu Jintao reaffirmed this position in June 2009, though in a slightly more subtle fashion, saying that “Tehran and Beijing should help each other to manage global developments in favor of their nations, otherwise the same people who are the factors of current international problems will again rule the world.”[8] Iranian leaders, for their part, express similar sentiments. Iran’s President Mahmoud Ahmadinejad has referred to the creation of a “new world order” on multiple occasions.[9]  This shared strategic goal has, in recent years, made Beijing and Tehran fast friends.[10] 

The relationship, of course, is not simply based on shared grievances or outlook, but on a pragmatic meeting of interests. In 2009, China imported more than 50 percent of the oil it consumed.[11] Iran has become one of the largest suppliers of that foreign oil, providing 11 percent of China’s oil imports in 2009.[12] China has increased its trade ties with Saudi Arabia (now Beijing’s number one oil supplier) —perhaps as a hedge against Iranian instability or a Middle East crisis centered on Tehran—but Iran’s crude oil supply to the PRC remains a lifeline upon which the Chinese economy is heavily dependent.[13] 

The U.S. may look with concern upon China’s energy partnership with what Washington considers to be a rogue regime in Iran, but Beijing contends that it has no other choice. Susan Shirk, a former deputy assistant secretary of state for East Asia and Pacific affairs, explains: 

As a latecomer to international energy markets, China finds that most of the good oil and gas assets in stable and respectable countries are unavailable because they are already owned by national companies in the producer countries or by Western oil companies. Therefore, China has been forced to turn to countries where U.S. sanctions forbid American companies from doing business, such as the Sudan and Iran.[14] 

China is a stout defender of these countries because it is so concerned with its energy security. Fearing that a disruption in its oil supply would severely damage the Chinese economy and lead to domestic unrest, China’s leaders believe it is necessary “to take physical control over oil and gas by buying up equity stakes or long-term supply contracts in producing countries” in order to “guarantee a secure flow of energy.”[15]  

Moreover, should China and the United States ever engage in a conflict over Taiwan, Beijing expects Washington to attempt to cut off its access to oil. A strong relationship with Iran will ensure that Tehran at least does not voluntarily agree to halt its own oil shipments to China. As John Garver notes, “the willingness of a major petroleum power like Iran to continue supplying China could be highly important under these circumstances.”[16]

Chinese Arms Transfers 

China has sold arms to Iran since the Iran-Iraq War (1980-1988). According to a Congressional Research Service report, China made over $3 billion in arms transfer agreements with Iran for the period 1980-1987.[17] Following a drop-off in Sino-Iranian arms trade after the war’s conclusion, that trade was once again on an upward trajectory during the 1990s: China supplied $400 million worth of weapons between 1993 and 1996, and $600 million during the 1997-2000 period.[18] In addition to small arms, Beijing has supplied Tehran with artillery pieces, anti-ship cruise missiles, surface-to-air missiles, fighter jets, tanks, armored personnel carriers, and fast-attack patrol vessels. “With the exception of Pakistan and possibly North Korea,” Bates Gill wrote in 1998, “China’s arms trade with Iran has been more quantitatively and qualitatively comprehensive and sustained than that with any other country.”[19] 

The value of arms transfers to Iran may have decreased in the current decade.[20] A recent Congressional Research Service report puts the value of Chinese arms transfers to Iran at $100 million for the period 2002-2005.[21] Beijing’s denials aside, such sales have certainly continued, as Iran is providing insurgents and terrorists in Iraq, Afghanistan, and Lebanon with Chinese-manufactured weapons. These include large-caliber sniper rifles, armor-piercing rounds, C-802 “Silkworm” anti-ship cruise missiles, shoulder-fired HN-5 anti-aircraft missiles, 107mm rockets, 60mm and 82mm mortars, rocket-propelled grenades, anti-aircraft guns, landmines, and components for roadside bombs. At the request of Iranian clients, Chinese companies have complied in removing the serial numbers from many of these items.[22] 

Sino-Iranian Nuclear Cooperation 

China has also provided assistance to Iran—in the form of both duel-use goods as well as technical know-how—in the development of its missile and nuclear weapon technologies.[23] Sino-Iranian nuclear cooperation began in the mid-1980s, “when China began training Iranian nuclear technicians in China under a secret nuclear cooperation agreement, assisted in the construction of Iran’s primary research facility, located at Isfahan, and also agreed to supply Iran with subcritical or zero yield nuclear reactors.”[24] U.S. pressure later prevented China from providing Iran with a research reactor, pressurized water reactors, and a uranium hexafluoride (UF6) plant. The Iranians, however, were able to proceed with construction of the UF6 plant with blueprints sold to them by the Chinese.[25] Though Jiang Zemin in 1997 promised Bill Clinton he would halt nuclear cooperation with Iran, China has not kept that promise.

When Iran announced in 2006 that it had successfully enriched uranium for reactor use, it was reported that UF6 provided by China was used in the process.[26] Whether with or without official sanction, Chinese entities have continued to evade export controls in recent years, “trading with Iran in technology related to ballistic missile, chemical and nuclear weapon programs…In the summer of 2007, Chinese shipments to Iran containing ‘sensitive’ military technologies, including dual-use items on international control lists, apparently increased. As recently as January 2009, Iran reportedly attempted to acquire missile-related, dual-use resources from China…”[27] And in October 2010, it was reported that Chinese firms were evading newly imposed sanctions (see below) and selling Iran duel-use technologies, possibly including “high-quality carbon fiber…to help [Iran] build better centrifuges.”[28] With Sino-Iranian nuclear cooperation now seemingly limited to less official channels, the nature and extent of that cooperation is perhaps even less clear than it once was.[29]

Choosing Sides: China in a Hypothetical U.S.-Iran Conflict

Tehran continues to move ever closer to acquiring a nuclear weapon, and stability in the Middle East is suffering for it. An Israeli strike on Iran could spark an unwanted conflict, and one which the United States might find difficult to stay out of. China’s position in such a conflict is not immediately obvious. Beijing has dedicated significant resources to cultivating relations with Tehran, in large part to counter American influence in the region. There is a clear history and ongoing practice of arms transfers from the People’s Republic of China (PRC) to Iran, and the People’s Liberation Army (PLA) has acquired and is developing high-tech, non-conventional anti-satellite (ASAT) and cyber capabilities—capabilities that could be used to assist friends and allies when the use of conventional assets is militarily or politically unfeasible.

In the event of a U.S.-Iran conflict, would China continue or increase arms sales to Tehran? Would the PLA employ its cyber and space warfare capabilities to impede American military operations? 

Beijing may see the increase of U.S. influence in the Middle East as detrimental to China’s long-term interests, but in this scenario, short-term interests are likely to be paramount. These short-term interests are twofold—energy security and the avoidance of military conflict with the United States. While Beijing might offer Tehran rhetorical or diplomatic support, material assistance from the PLA is unlikely to be forthcoming. 

At present, approximately 40 percent of the world’s total traded oil passes through the Strait of Hormuz, and in 2003, 24 percent of the oil passing through the Strait went to Asia.[30] In 2009, Iran provided China with 11 percent of its oil imports; more significantly, recent statistics show that approximately one-third of China’s oil imports flow through the Strait of Hormuz.[31] Closure of the Strait—which would be possible if not likely in the event of U.S.-Iranian conflict—would be damaging to China. 

China’s primary interest would be in re-opening or keeping open the Strait of Hormuz and maintaining the flow of oil through it. Material assistance to Tehran would serve to prolong the war, thus prolonging the resulting oil shortage. Beijing would not be willing to accept the economic, and thus domestic, fallout of such a policy. 

Beijing also has an interest in avoiding a military confrontation with Washington. Although the PLA is engaged in a serious military modernization and buildup, whose design is aimed at defeating the American military, China has long sought to avoid armed conflict with the United States; that policy is likely to remain in place for the foreseeable future, as China’s leaders are well aware that that is a war they cannot yet win. Chinese capabilities to contest the American military in or around the Persian Gulf, moreover, are virtually nil. 

The use of cyber and space weapons against U.S. assets might be politically attractive, because they would not directly cause American military deaths. But cyber and space attacks aimed at impeding U.S. military operations, or which put American civilian lives at risk, are certain to be seen as hostile acts. And as Chinese cyber activities tend to be more readily traceable back to China than is the case for cyber crimes committed in other countries (due to the state-sponsored and somewhat more controlled Chinese hacker population[32]), the United States would not absorb these attacks without responding. It might respond in kind, or even worse for Beijing, the U.S. might conduct strikes against Chinese ASAT launch pads and cyber units.

In the short term, Chinese involvement in any future U.S.-Iran conflict is likely to be minimal. Besides calls for cessation of hostilities by both sides, or perhaps overt rhetorical support for Iran, Beijing is unlikely to offer any substantive assistance to its greatest friend in the Middle East. To do so would simply be contrary to its own interests.

In the longer term, however, one cannot be so certain. Over the next two decades, with PLA advancements in anti-ship ballistic and cruise missiles, naval forces, national missile defenses, air power, air defenses, and asymmetric capabilities, China will be much more capable of defending itself from foreign aggression. In the future, then, Beijing, confident in its own ability to fend off any U.S. attempts at retaliation, may be more tempted to use the cyber and space capabilities mentioned above in support of Tehran, potentially complicating U.S. military planning.

PRC-Iran Relations: Beyond Oil 

If, in the short term, the People’s Republic won’t choose sides in a conflict, why does it seem to be choosing sides now? Wouldn’t a non-nuclear Iran—with stable relations with the United States, Europe, and Israel—be in the interests of Chinese oil companies? Wouldn’t China’s energy security concerns be lessened if one of its largest foreign oil suppliers was not putting itself at risk of attack? 

International politics and China’s strategic vision appear to be as important to Beijing as economic interest. Prior to the 1800s, China was the dominant power in Asia, fashioning itself as the Middle Kingdom. PRC leaders see China’s partitioning by the Europeans, defeat in the Sino-Japanese War, and 20th century impotence as shameful injustices forced upon China, and they continue to view dominance in Asia as Beijing’s historic and cultural right. Though these grievances are nothing new, it is only over the last two decades that China has begun to act on them. 

China is acting to alter the balance of power in Asia and working to diminish U.S. presence in the region. It has at times sought to create new East Asian institutions that exclude the United States and American partners such as India and Australia. More generally, the People’s Republic has tried to drive a wedge between America and its long-time Asian allies and friends.[33] 

Perhaps more significantly, the PLA has engaged in a significant build-up over the past twenty years, not only developing new space and cyber technologies and doctrines, but modernizing its conventional forces as well. The PLA Air Force is on pace to have the largest air fleet in the region within the next ten years; the Navy is developing blue-water capabilities, deploying new submarines at an unparalleled rate, and is determined to add aircraft carriers to its fleet; and the PLA has modernized and grown its strategic conventional and nuclear missile force. In short, China is developing considerable power projection capabilities at a time when it faces no real external threats. Its cyber and space weaponry are in particular aimed at attacking America’s weaknesses. Although China’s strategic plans are not made public, the nature of its military build-up suggests that China is intent on reasserting itself as the dominant power in Asia.

Considering these developments, China’s relationship with Iran serves three purposes beyond energy supplies. First, if China wishes to replace the United States as the dominant power in Asia, it behooves China to make sure that America focuses its attention elsewhere. As Wang Jisi, one of China’s top U.S. analysts, wrote in 2004, “The facts have proven that it is beneficial for our international environment to have the United States militarily and diplomatically deeply sunk in the Mideast to the extent that it can hardly extricate itself.”[34] In largely refusing to cooperate on Iran with the United States and Western Europe, and in fact protecting Tehran in the Security Council by weakening sanctions resolutions, Beijing ensures that Washington’s energy is spent on the Middle East. China can then continue its slow, though persistent, march towards dominance in Asia without significant American meddling. A gradually resurgent China will simply not draw American attention like an imminently nuclear-armed Iran. When America’s attention is deflected from the Asia-Pacific, China benefits.

The success or failure of American policy on Iran can also have implications for U.S. credibility in Asia as well as for China’s own prestige. Asian countries are concerned about the rise of China—especially Beijing’s increasing military assertiveness—and are unsure of America’s commitment to the region. These countries may one day face the choice of giving into Chinese demands on trade relations and territorial disputes, or refusing those concessions on the assumption of American support. If the United States ultimately fails to prevent Iran from acquiring a nuclear weapons capability, and China is perceived as having played a part in that failure, there could be far-reaching consequences in Asia. The U.S. has had interests in the Middle East for many decades, but China has only recently renewed itself as a player in the region (in 1998, the value of China’s trade with the Middle East was only $7.4 billion; by 2007, it had increased more than twelvefold to $93.7 billion[35]). If Beijing can counter Washington there, Asian states may start to believe that the Chinese can certainly counter the Americans in Asia. American credibility would take a hit and Asian states could conceivably tighten ties to China. 

Finally, the PRC can use its support of Iran as a bargaining chip in future negotiations with the United States. Should U.S. efforts at halting Iranian nuclear activities become more desperate, China could offer its support in return for America halting arms sales to Taiwan, for example. In fact, China has in the past explicitly connected its support for Iran to America’s support for Taiwan: 

During Clinton’s 1998 visit to China, Beijing proposed and the United States considered but rejected a U.S. pledge to deny missile defense to Taiwan in exchange for a Chinese pledge to halt missile cooperation with Iran. During U.S.-PRC arms control negotiations in February 2002, a Chinese official told the Associated Press that the United States could not accuse China of violating its commitments toward Iran while itself selling large amounts of arms to Taiwan. United States arms sales to Taiwan were also a type of proliferation, the official said.[36] 

A trade such as the one described above would materially damage America’s position in Asia and, again, would have negative consequences for U.S. credibility in the region.

The View from Tehran

Tehran’s interest in a positive relationship with Beijing is clear; Iran has benefited economically, politically, and militarily. Thanks to its ties to Beijing (and also to Moscow) Tehran has been able to pursue its nuclear program and engage in other provocative acts without fear of a strong, united, international response. This does not mean that Iran can throw caution to the wind—China is not a treaty ally, and cannot be expected to act contrary to its own interests. In the 1980s, Iran had hoped to partner with China and others in an explicitly anti-U.S. alignment, but Beijing had no interest in such a grouping: 

Tehran apparently understands the limits of China’s support…[S]ince Tehran understands that China’s interests with the United States trump China’s interests with Iran, securing Beijing’s necessarily limited support against the United States will not be served by conspicuous efforts to draw China into alignment against Washington. Iran’s interests would be better served by attempting to insulate Sino-Iranian relations from Iranian-U.S. tensions. The principles of mutual benefit and equality require that the reverse also hold: Sino-Persian cooperation will continue regardless of U.S.-PRC conflicts.[37]

In essence, Iran will take whatever support China is willing to offer. While Beijing’s international reputation may be damaged for maintaining close relations with Tehran, the reverse is not true. There is little, if any, downside for Iran in dealing with China. China develops Iran’s oil fields, buys its oil, provides it with arms, and offers it some cover at the United Nations Security Council. Tehran might wish for more, but it does enjoy the support it currently receives.

Recent Developments

On June 9, 2010, the UNSC adopted—with Chinese support—Resolution 1929, which imposed additional sanctions on Iran, including sanctions on the sale of arms and on the conduct of business with Islamic Revolutionary Guard Corps-controlled entities. Beijing only agreed to support the resolution following “the inclusion of language that permits continued foreign investment in Iran’s oil and gas sector.”[38] Iran’s initial reaction indicated disappointment with China. Ali Akbar Salehi, Iran’s vice president and nuclear agency head, at the time expressed surprise “that China would accept [US] domination”[39] and said that China is “showing a behavior that will certainly influence the Islamic world and the minds of Muslims…It will slowly lose its respectable position in the Muslim world and will wake up when it’s too late.”[40] Iranian officials, however, quieted the airing of such sentiments shortly after the resolution’s passing.

On June 11, just two days after the resolution’s adoption, Iranian president Mahmoud Ahmadinejad was at the Shanghai World Expo speaking about the Sino-Iranian relationship. “We have very good relations with China,” he said, “and there is no reason to weaken this relationship.”[41] 

PRC officials have emphasized the importance of China’s ties to Iran as well. “China values its relations with Iran,” explained Chinese foreign ministry spokesman Qin Gang on June 10. “The development of China-Iran relations is not only in the interest of the two sides, but also conducive to regional peace, stability and development. We are also of the view that the relationship between China and the Islamic world based on solidarity, mutual trust and cooperation can stand the test and will keep moving forward with concerted efforts of the two sides.”[42] In August, the Chinese vice premier told Iran’s oil minister Masoud Mir-Kazemi that the key goals in the China-Iran relationship are to “solidly push forward existing co-operative projects…[and] to deepen bilateral pragmatic co-operation.”[43] 

Indeed, China has made clear the importance of its ties to Iran, indicating resistance to any sanctions beyond those called for in UNSC 1929. China denounced the additional sanctions which the United States, Australia, and the European Union have since imposed. “China has noticed the unilateral sanctions announced by the US and others over Iran,” said Qin Gang at a July 6 press briefing. “The Security Council not long ago adopted the 1929 Resolution on the Iranian issue. China believes that the resolution should be earnestly, accurately and fully implemented, instead of being arbitrarily interpreted and expanded.”[44] 

China not only opposed these sanctions, but acted to undermine them as well. Additional measures have sanctioned the sale of gasoline to Iran; China, along with other countries friendly to Iran, stepped in to fill the breach.[45] According to reports, Iran bought half of its gasoline imports in July from Chinese sellers, amounting to approximately 45,000 barrels per day.[46]

Implications for the United States

U.S. policymakers must accept that China’s interests in Iran simply do not align with America’s. While Beijing will on occasion agree to a watered-down UNSC resolution, it will not take action that will seriously harm Iran. Rather, Beijing wants to make sure that America remains bogged down in the Middle East, squandering its resources and diverting its attention from the Asia-Pacific. Chinese assistance in dealing with Tehran would be helpful, but it cannot be expected; recognizing this, policymakers should focus on devising solutions that sideline, or at least do not necessitate, Chinese participation. 

Finally, in considering the possibility of a military conflict between Washington and Tehran, American military planners must take Chinese capabilities into consideration. While Beijing does not wish to see such an eventuality—and certainly does not want to be involved—history shows us that great powers cannot always control their partner states and can be drawn into wars that they had no intention of fighting. As Beijing continues to bind itself economically and diplomatically to Tehran, developments in Iran may start having consequences for China’s own credibility. In such circumstances, Chinese intervention in a conflict between the United States and Iran becomes much more likely.