China and Iran: From Silk Road Partners to Modern-Day Geopolitical Considerations


Normally, this post would have been scheduled for later this year (most likely toward the end of 2020) but for obvious reasons, Iran is in the spotlight and as such, it makes sense to put the economic (and otherwise) relationships between China and Iran under the microscope sooner rather than later.

Right off the bat, it is vital to point out that for a country such as China, with the world’s #2 GDP in nominal terms and most likely on its way to #1, it is oftentimes necessary to forge alliances let’s say out of convenience or as a result of a temporary alignment of interests. The same way, pretty much any major economy finds itself having to do just that every once in a while.

In terms of modern-day geopolitical analysis, Iran is pretty much always included in the “China – Russia axis” and rightfully so in light of the fact that as a regional power, it played a key role (one harshly criticized by the West) in equations such as enabling Bashar al-Assad to remain in power. In fact, a significant part of the reason why Qasem Soleimani was considered one of the top US enemies revolved around his on-the-ground involvement in Syria.

So, is Iran simply an “occasionally convenient” ally for China?

In other words, does China pay attention to the Iran dimension of the China-Russia axis only when it is geopolitically convenient to do so?

As anyone who has at least occasionally opened a history book can confirm, that is most definitely not the case. On the contrary, we are talking about a relationship that spans not decades or centuries but downright millennia, one that can be at the very least traced back to 200 BC Silk Road dealings. Therefore, the China-Iran relationship needs to be treated as the complex equation that it is, with superficial analysis yielding sub-optimal results.

Is it a perfect relationship?

Most definitely not, as that is usually not the case when it comes to geopolitics. More specifically, it is difficult for China to have 100% straightforward relationships with one nation or another in the region because there is always a fine line that needs to be walked. For example, China also considers its cooperation with Saudi Arabia when it comes to key issues a priority and… well, let’s just say there are easier goals than juggling between Saudi Arabia and Iran with the intention of keeping both lines of communication not just reasonably operational but actually effective.

Is there a lot on the line?

Most definitely, there is quite a bit on the line as far as both the present and especially the future are concerned in light of the fact that China still has a long way to go until it can be content with its regional influence. Needless to say, this region is not Africa, where China has been far more effective in terms of exerting dominance. In fact, a valid case could be made that this region represents the #1 challenge for China in its geopolitical influence equation. However, it is worth pointing out that this represents one key example as to why the Russian dimension of the China-Russia axis becomes relevant and why Russia has leverage over China despite having a GDP between that of Spain and Italy, hardly a match for the economic behemoth that is China.

However, things tend to get quite tricky to the point of being counter-intuitive because:

  1. Yes, we are dealing with a relationship that spans millennia
  2. Yes, the geopolitical component behind it is crystal-clear
  3. Yes, China has its share of pragmatic reasons for maintaining ties with Tehran

… but does this mean today’s economic relationship between the two is robust?

No, it does not.

We need to understand that Iran is dealing with very serious sanctions, especially from the direction of the United States and especially since the US decided to withdraw from the JCPOA (Joint Comprehensive Plan of Action), with Donald Trump famously declaring himself dissatisfied with the fact that Iran was on the receiving end of a deal too good to make sense.

While China manifested its disapproval of this decision right from the beginning and stated that trade with Iran would continue, the perspective of Chinese companies being blacklisted by the United States ended up generating effects.

As an initial point of comparison, China used to import over 600,000 barrels per day from Iran up until September of 2018. After the US re-introduced sanctions, some countries including China received a so-called waiver which allowed them to continue purchasing from Iran (in China’s case 360,000 barrels per day at most) for 180 days.

Right from the beginning, controversies abounded, with China importing slightly more than that (390,000 barrels per day) as of November, with its imports going pretty much back to the standard by April and even flirting with the 800,000 zone toward the end of the waiver period.

Once it expired, however, things changed.

China initially stopped its imports and even once it resumed them despite various US-related risks, the quantities (at least officially speaking) were strikingly lower, from 100,000 to 200,000 barrels per day for the most part.

Examples can continue and this much is certain: trade between China and Iran did fall dramatically, with the roughly 70% crash between October of 2018 and December of 2018 making it clear (as it that were even necessary) that sanctions are the main variable in this equation. As another example, China’s exports to Iran amounted to $1.2 billion back in October of 2018 and decreased all the way to $428 million by February of the following year. Trade numbers did go up (as per the oil example) up until the waiver expiration and there are controversies surrounding various more or less original “off the books” deals between the two entities but still: for the most part, the narrative that trade volume between the two nations has fallen dramatically is quite compelling.

A straightforward conclusion is therefore this: while China’s influence is growing by the year, the Iran example does tend to prove that there is a long way to go until China can afford to make its own rules with respect to sensitive geopolitical topics, with China still having to proverbially play ball when it comes to key issues such as the West’s Iran strategy so as to avoid isolating itself from Western economies.