China-Iran relations, a brief summary

Traduzione di Elena Ciullo 

Relations between China and Iran have deep roots, that date back to the times of China proper and Greater Persia. The first contacts date back to 126 BC, during the Han dynasty, when explorer Zhang Qian wrote the first report in Chinese about the Parthian Empire.

The Popular Republic of China established the first diplomatic relations with the former Imperial State of Iran in 1971, after the 2758 Resolution by the General Assembly of the United Nations. The 8th April 1973 the two countries signed a five-year agreement on trade credit, making the Iranian riyal the reference currency for bilateral transactions and increasing the trade volume from 780 million to 3.6 billion riyal (circa 52 million dollars).

With the Islamic revolution in 1979 and the birth of the Islamic Republic of Iran, China became an important commercial ally: the western embargo on arms imposed to Iran between 1979 and 1980 after the return of Ayatollah Khomeini, obliged the newly born Islamic Republic to resort to alternative powers such as China, Russia and North Korea, as weapons providers in the context of the war against Iraq.

Chinese companies have played a fundamental role in the economic development of Iran, especially when it comes to infrastructure. For example, the Line 5 of Theran’s underground, the first Iranian underground system, was inaugurated in 1999, build by China North Industries Corporation (NORINCO).

In 2011, the Chinese expert on the Middle East Wu Bingbing summarised the four principal key aspects of the PRC’s strategy in the Persian Gulf region: rejecting the unilateral control of the region by any single power; prevent the development of an anti-Chinese regime in the region; oppose the formal support of Taiwan’s independence by the Gulf countries and enhancing the potential support of Gulf countries to Chinese foreign politics.

During President Xi Jinping visit to Theran in January 2016, the two countries signed the “Comprehensive Strategic Partnership” agreement, enhancing their bilateral cooperation in several sectors and facilitating the increasingly greater role of China in the development of the Iranian energy infrastructure.

In December 2019, the two countries, together with Russia, carried out the first joint military exercise in the north of the Indian Ocean, named “Marine Security Belt” (CHIRU). The declared aim is to tackle piracy in the region and improve cooperation when it comes to marine search and rescue operations.

The most recent landmark of Sino-Iranian relations is the “China-Iran 25-year cooperation program”, signed in March 2021. Its estimated value amounts to 400 billion dollars and it was considered by the international community as a challenge to sanctions against Iran. The agreement enabled Iran to have an economic way out in an international hostile climate, while for Beijing it was an important step towards the stabilization of its own dependence on energy imports and a further gateway to the region.

Iran is also a fundamental member of the Belt and Road Initiative, considering its strategic position for central Asia and the Middle East. Even though most of the trade between China and the Islamic Republic is carried out by maritime routes, from 2016 an increasing number of goods is delivered through containers, from Ürümqi to Teheran, going via Kazakistan, Kirghizistan, Uzbekistan and Turkmenistan, taking half the time.

The Popular Republic of China is a significantly important trade partner for Iran. In 2023, circa one third of Iranian import came from China, accounting for 10 billion dollars. Exports to China account for a similar percentage, though for a value of 3,67 billion dollars. Therefore, on the basis of the trade balance, Iran is mostly an importer country, where total imports are circa three times greater than exports.

The main element regarding recent relations between China and Iran is energy. The Popular Republic of China depends on oil imports, even though it is the fourth largest producer in the world. The percentage of oil imported from Iran is low, but data on imports from United Arab Emirates, Malesia and Oman must be considered: the amount of oil that China imports from these countries does indeed originate in Iran, but it is relabelled to avoid the sanctions imposed by the United States. Therefore, the data previously mentioned about the trade between Iran and China are surely underestimated.

Considering recent tensions in the Middle East, the stance of China needs to be analysed. The Chinese Minister for foreign affairs has deeply condemned American attacks against Iran, inviting all parties to “reach a cease fire as soon as possible”. According to the Chinese economist Yue Su, “A steadier Middle East supports the strategic and economic interests of China […] Beijing will want to affirm itself as a constructive power able to contribute to global stability”. According to the experts of the sector, Chines companies are today very cautious when it comes to when operating in Iran for fear of further American sanctions, but if sanctions were to be loosened, tens of thousands Chines companies would invest in tourism, infrastructure and the real estate sector.

The situation is changing constantly, but for now China doesn’t seem to deeply commit to materially supporting Iran. The words of condemnation against the actions carried out by the United States and Israel were pronounced by several politicians of the Popular Republic of China, including President Xi Jinping during a phone call with Russian President Vladimir Putin, but for now it’s only rhetoric.

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