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Iran - China Relations

China sees Iran as its main strategic partner in the region by virtue of Iran's geographic location, and by virtue of the fact that it is the only major power in the region which isn't allied with the United States. China was a top consumer of Iranian oil even during the three years of international sanctions that targeted Irans nuclear program. Now that the sanctions are lifted and Iran is ramping up oil production, that relationship could grow further. China had been Irans biggest trading partner in the six years since 2010. Bilateral trade in 2014 was around $52 billion, but dropped off in 2015 because of falling oil prices.

In July 2018 the US State Department said that countries buying Iranian oil should bring down to zero their Iranian crude imports by the time Washington re-imposes sanctions on Tehran on 04 November 2018. By early August 2018 Washington had failed to persuade China to reduce Iranian oil imports, which was damaging the Trump administration's efforts to isolate the Islamic Republic after the US exit from the 2015 Iran nuclear deal. At the same time, China pledged not to increase purchases of Iranian crude amid concerns that Beijing would purchasing excess oil from Iran. Doing so would undermine Washington's push to isolate Tehran.

Chinese Foreign Ministry spokeswoman Hua Chunying underscored that Beijing is up in arms about unilateral US sanctions mechanisms and plans to keep trade ties with Iran in accordance with international agreements. "China and Iran unwaveringly maintain normal trade and economic ties. China will continue to cooperate with Iran adhering to its international obligations".

Iran has had relatively good relations with China, India, and Russia, particularly in the area of military cooperation. In the early 2000s, China emerged as an important trade partner in both imports and exports. Japan retained the position that it assumed in the mid1990s as Irans best export customer. Marybeth Davis noted in 2013 that "Over the past 30 years, China and Iran have developed an active but limited partnership, cooperating across a spectrum of political, security, and economic interests. They have travelled an uneven path together since the seminal year of 1979, which witnessed the revolutionary birth of Ayatollah Khomeinis Islamic Republic of Iran and the evolutionary unfolding of the Reform and Opening Policy of Deng Xiaopings Peoples Republic of China (PRC)."

As Chinas modernizing defense industry was looking for export markets, Iran became a major purchaser of conventional Chinese-made weapons during the protracted Iran-Iraq War of the 1980s. In the 1980s and 1990s Chinas most advanced industrial and defense technology programs, in nuclear energy and missile production, provided direct assistance to the Islamic Republic. After 2000 Iran continued to focus its arms imports on advanced weapons and missile technology. In the early 2000s, China reportedly developed several new types of tactical guided missiles, mainly for use on missile patrol boats, specifically for sale to Iran.

Irans oil and gas sector requires investment capital and technology, both in upstream development and downstream refining and distribution. Some Iranians were concerned that Iran would grow increasingly dependent on China for development financing as Western companies concede to international pressure and limit their business in Iran's energy sector. As a result, over the long-term Iran's oil sector will suffer. China's work is subpar and does not meet Western or international standards.

Although Chinese companies were increasingly active in Iran, by 2010 their activities had been limited to smaller projects like Masjid-e-Suleyman oil field because the Chinese have yet to develop and master the technology required for larger and more complex projects, such as North Azadegan and Yadaveran. China was using its smaller, cheaper projects, such as the development of Masjed-e-Suleyman (valued at less than USD 200 million), as "practice" as they develop their own technology and techniques.

After years of working with the West, Iranians found it difficult to relate to the Chinese. Language barriers impeded communication with Chinese workers, greatly complicating joint ventures and technology transfers. Moreover, Chinese companies reportedly often insist on using their own labor, meaning the projects do not bring jobs to Iranians. However, Iran had no choice but to work with China. In some cases awarded tenders to Chinese companies over Iranian ones because of the cheaper bids, in effect sacrificing quality for price.

On July 14, 2015, the P5+1 (China, France, Germany, Russia, the United Kingdom, and the United States), the European Union (EU), and Iran reached a Joint Comprehensive Plan of Action (JCPOA) to ensure that Irans nuclear program will be exclusively peaceful. China played a key role in international efforts to roll back sanctions against Iran in exchange for Tehran scaling back its nuclear program.

Iran's Supreme Leader Ayatollah Ali Khamenei called January 23, 2016 for closer economic and security ties with China, saying Iran has "never trusted the West." Khamenei told Chinese President Xi Jinping that Tehran was seeking to expand ties with "more independent countries" like China. Xi was the first head of state from the group of global powers that negotiated the historic nuclear deal with Iran to meet with Khamenei.

In an op-ed article appearing in an Iranian newspaper and quoted by the Chinese Foreign Ministry, Xi said: China appreciates Iran's assurance of not intending to develop nuclear weapons, supports Iran in upholding its legitimate rights and interests, and fully recognizes Iran's contribution to the conclusion of the Joint Comprehensive Plan of Action.

The foreign ministers of China and Iran urged the governments that signed the Iran nuclear deal to continue to adhere to the agreement regardless of "any changes in the domestic situations of the countries concerned." Their remarks December 05, 2016 appeared directed at Donald Trump, who said on the campaign trail this year he would renegotiate the terms of the deal and increase its enforcement, calling the pact "the dumbest deal I think I've ever seen."



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Page last modified: 07-08-2018 23:40:22 ZULU