ACIS-IP102

Increasing Constraints on Chinese Support for Iran in 2020 

Micha'el Tanchum*

ACIS Iran Pulse no. 102 | December 30, 2019

China is closing out the year 2019 by conducting a four-day naval exercise with Iran and Russia in the Arabian Sea that commenced on 27 December 2019 (RadioFarda). Concurrently, the U.S.-led maritime commerce protection force – including the participation of Bahrain, Saudi Arabia and the United Arab Emirates (UAE) – is operating in the same maritime domain. Despite the appearance of a Persian Gulf face-off between Sino-Russian-backed Iran and the Western-backed Arab Gulf powers, China's participation in the drill does not signal Beijing's alignment with Iranian interests in the Persian Gulf.  On the contrary, China has been actively pursuing a policy to reorient both Iran and its Arab Gulf rivals into a new multilateral architecture for the Middle East with a China-centric framework. China’s outreach to Saudi Arabia and the UAE (United Arab Emirates) to achieve this architecture places severe limits on the kind of support Iran can expect from China in 2020.  While Iran is an asset for Beijing's strategic ambitions in Eurasia, it remains a liability for Beijing's strategic goals for the Middle East.

During the course of 2019, China has made significant strides in bridging the Persian Gulf divide by enhancing the strategic nature of its respective relationships with Saudi Arabia and the UAE. The timing of the announcement of the dates for the Sino-Russian-Iranian trilateral drill illustrates China's attempt` to develop an even-handed approach to the Iranian-Saudi rivalry.  The timeframe of the drill was announced in Tehran at the beginning of December 2019 by Iranian Navy Chief Rear Admiral Hossein Khanzadi during his meeting with Deputy Joint Chief of China's armed forces, Major General Shao Yuanming (TasnimNews).  Exemplifying Beijing's increasing emphasis on balancing its respective defense relationships with Tehran and Riyadh, the announcement coincided with the conclusion the three-week joint Blue Sword 2019  between the Saudi Royal Navy's Western Fleet and China's People's Liberation Army Navy (aawsat).

In November 2019, China hosted its inaugural Middle East Security Forum in Beijing to promote its vision for a multilateral framework in the region.  The Middle East Security Forum is President Xi Jinping's "new idea" to extend the dialogue of the China-Arab States Cooperation Forum to encompass the region's security, emphasizing development as the means to promoted dialogue (FMPRC). The Chinese concept envisions a multi-lateral collective security mechanism that brings together Iran and its Arab Gulf rivals, in which hard power security arrangements are bolstered by extensive soft power economic agreements. 

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Iran as a Eurasian Asset for China

Iran's strategic position at the heart of Eurasia's southern rim makes it the natural geographic hub in China's Belt and Road Initiative (BRI).  Iran provides the only connecting link for an entirely overland China–Europe rail that does not traverse Russian territory. China’s current non-Russian option, the Trans-Caspian Corridor, requires ferrying cargo across the Caspian Sea from Central Asia to Azerbaijan. An Iranian rail link would offer a contiguous and more cost-effective solution.

With its newly constructed deep-sea port at Chabahar and rail links extending into Central Asia, Iran is also poised to become the hub of the International North-South Transit Corridor, an Indian Ocean-to-Europe commercial route that would provide an alternative to Beijing's BRI architecture (ACIS Iran Pulse no. 63, 2013). Russia and India have engaged Iran as partners in the INSTC project. China also seeks to incorporate Iran's commercial transit infrastructure into the BRI architecture and has made overtures to Tehran concerning the Chabahar port. Iran's disappointment with India's adherence to U.S. sanctions prompted Iran to suggest Chabahar could be linked to China-Pakistan Economic Corridor's Gwadar port, 72 km eastward on Pakistan's Arabian Sea coast. Utilizing Iran’s north–south rail links, China could create a vital vertical axis connecting Beijing’s main East–West corridor to the Middle East and the Arabian Sea (Xinhua, May 24, 2019). Robust Sino-Iranian cooperation would secure China’s growing economic domination in Central Asia, and further extend Chinese influence to the Caucasus and the Eastern Mediterranean.

Against this geopolitical backdrop, Chinese President Xi Jinping's landmark January 2016 visit to Tehran held out the possibility of a reconfiguration of strategic relations on the Eurasian landmass (SCMP, January 2016). This first state visit by a Chinese President since 2002 was prompted by the suspension of international sanctions against Iran as a result of the then recently signed Iran nuclear deal, formally Joint Comprehensive Plan of Action (JCPOA). Inking 17 agreements with Iran, China agreed to deepen its strategic relationship with the Islamic Republic over the course of 10 years, including raising the level of China-Iran bilateral trade to the massive sum of US$ 600 billion.

Iran as a Middle Eastern Liability for China

Despite Iran's geo-economic significance for Eurasian commercial connectivity, China has been hesitant to embrace Iran, as indicated by Beijing's continued lack of enthusiasm for Iran's full SCO membership. China's full embrace of Iran would undermine Beijing's hitherto carefully balanced strategic position in the Middle East that enabled Beijing make important inroads into Saudi Arabia, the UAE, and Egypt, Iran's principal Arab rivals. 

Saudi Arabia is China's largest Middle Eastern trading partner and is second only to Russia as China's largest oil supplier.  In 2017, China signed a $65 billion package of economic and trade agreements with the kingdom as well as an additional package of economic agreements in February 2019 (Foreign Policy; Reuters).  Since the 2017 agreement, China's relationship with Saudi Arabia has evolved from transactional cooperation to a "comprehensive strategic partnership," with the alignment of  Saudi Arabia's interests in China’s effort to create its self-declared 21st century Maritime Silk Road (MSR) (Vancouver-China Consulate).  The "Road" of the Belt and Road Initiative, the MSR is a maritime China-to-Europe transportation corridor consisting of a series of Chinese-built port installations extending westward across the Indian Ocean and then via the Red Sea and Suez Canal to the now Chinese-owned port of Piraeus, on Greece’s coast. After heavy Chinese investment, Piraeus is one of Europe’s major seaports and a hub for Chinese goods to enter European markets.

China is the world’s leading exporter of containerized cargo, shipping three times as much cargo as its leading competitor the United States (WorldShippingOrg). China cannot comfortably tolerate Iran’s proxy war against Saudi Arabia in Yemen as it endangers the maritime security domain in a critical segment of the MSR, namely the Gulf of Aden-Red Sea corridor.  In January 2016, counter-balancing its opening to Tehran, Beijing declared its support for Yemen’s efforts to defeat the Iranian-backed Houthi rebels. In April 2016, China began construction of its own overseas base in Djibouti, across from Yemen between the Gulf of Aden and the Red Sea. Djibouti severed diplomatic relations with Tehran in January 2016 and signed a security cooperation agreement with Riyadh, which established its own base in the country after China did.

 Beijing has also worked to enhance Riyadh's aerial capabilities through the sale of ballistic missiles and, more recently, allegedly assisting the kingdom with its own ballistic missile development program. Concordantly, China is currently in negotiations with Saudi Arabia for the sale of autonomous weaponized drones. Beijing also sells its Wing Loong unmanned aerial vehicles (UAVs) to the UAE (CNN, albawaba).

Saudi Arabia and the UAE, with its own base on Eritrea's Red Sea Coast, maintain a deep and active partnership with Egypt in the protection of Red Sea. China, also concerned about commercial transit through the Suez Canal, has similarly invested billions of dollars in Egypt since Abdel Fatteh el-Sisi assumed Egypt's presidency in 2014, becoming the largest investor in Egypt's Suez Canal Economic Zone mega-project (Xinhua, Nov., 18 2019).

In the wake of the September 14, 2019 attack on Saudi Arabia's Abqaiq oil processing plant that was widely attributed to Iran, China’s relations with the countries of the Persian Gulf have reached an inflection point.  A week after the attack, Iran announced that China will be participating in joint naval exercises with Iran and Russia (PressTV, Sep.,21 2019). Beijing has no intention of sacrificing its relations with Saudi Arabia and the UAE. China will likely present its participation in the trilateral dill with Iran as a step toward a new multilateral security framework for the protection of maritime commerce and invite the Arab Gulf powers to engage China's auspices for brokering new security arrangements with Iran.  It may be precisely because of China's deepening strategic relationship with Saudi Arabia and the UAE that Beijing feels it can participate in the naval drill with Iran.

While Iran's integration into China's Belt and Road Initiative (BRI) is highly consequential for the expansion of Chinese influence over the economic and security relations across Eurasia, Iran's highly troubled relations with its regional neighbors form a liability for the China’s wider strategic agenda in the Middle East. China's economic relationship with Iran is entirely tilted in Beijing's favor.  In  2017, the year before sanctions were re-imposed, China accounted for a quarter of Iran’s trade, while Iran accounted for only one percent of China’s trade (trading-economics). While China supports Iran to maintain a minimally functioning economy, Beijing’s larger interests in southwest Asia define the extent of that support as Beijing works to expand its influence across the Middle East.

Dr. Micha’el Tanchum is a senior associate fellow at the Austrian Institute for European and Security Studies (AIES), a fellow at the Truman Research Institute for the Advancement of Peace, the Hebrew University, Israel, and non-resident fellow at the Centre for Strategic Studies at Başkent University in Ankara, Turkey (Başkent-SAM).  @michaeltanchum