Implementing the China-Iran Comprehensive Strategic Partnership: Not So Fast

12 Apr 2022

Implementing the China-Iran Comprehensive Strategic Partnership: Not So Fast

By Jacopo Scita

April 12, 2022

https://agsiw.org/implementing-the-china-iran-comprehensive-strategic-partnership-not-so-fast/

On January 15, Iranian Foreign Minister Hossein Amir-Abdollahian and his Chinese counterpart Wang Yi announced the start of the implementation of the 25-year comprehensive strategic partnership, which Iran and China signed in March 2021 after five years of negotiations. The announcement came at a heightened moment for China-Middle East engagement. In fact, immediately before hosting the foreign ministers from Iran and Turkey, Wang welcomed to China a Gulf Cooperation Council delegation led by the GCC secretary general and the foreign ministers of Saudi Arabia, Bahrain, Kuwait, and Oman. The message was that China’s relations with partners across the Middle East were beginning the new year safe and sound. For Iran, the timing made once again clear that Beijing wasn’t playing favorites in the Gulf, and that the new phase of the comprehensive strategic partnership was, if anything, just the continuation of China’s balancing strategy in the region.

Since March 2021, two China-Iran developments have made headlines. At its 2021 summit in Dushanbe, the Shanghai Cooperation Organization announced that, after 15 years, Iran’s bid to obtain full membership in the organization was finally approved. Iranian President Ebrahim Raisi celebrated the approval as an extraordinary success, framing it as an indication that “hegemony and unilateralism are failing” to the benefit of “independent” countries like Iran. And since the end of 2021, China has significantly ramped up oil imports from Iran, despite sanctions, with Chinese customs authorities officially declaring the purchase of Iranian crude for the first time since December 2020.

Yet, three months into the implementation phase of the comprehensive strategic partnership, there is little indication of any substantial change in the broader trajectory of China-Iran relations. While that is too short of a time frame to judge a roadmap that is supposed to define the next 50 years of bilateral ties, there are at least three substantial unresolved questions, suggesting that any real improvement in the relationship between China and Iran will not come fast.

First, despite the comprehensive strategic partnership presenting a multisectorial outlook, it is evident that the economic component sits at the core of the advancement of China-Iran relations. A return to the 2015 Joint Comprehensive Plan of Action nuclear deal with Iran, which Beijing supports, and the related lifting of U.S. sanctions, is necessary for a significant breakthrough in Chinese public and private investments in Iran. The comprehensive strategic partnership was originally launched in 2016 immediately following the implementation of the JCPOA, implicitly linking Beijing’s renewed interest in upgrading its relationship with Tehran to the political and economic developments coming out of the nuclear agreement.

The recent opening of a Chinese Consulate in Bandar Abbas, the first in the country, appears significant. In fact, the area of Bandar Abbas is of great strategic importance, potentially facilitating China’s access to the Chabahar Free Trade Zone as well as to the broader coastal area that includes Iran’s Chabahar and Pakistan’s Gwadar ports. Yet, since 2018, Iran has been experiencing a substantial stagnation of Chinese investments. According to data from the American Enterprise Institute’s China Global Investment Tracker, Beijing’s investments in Iran picked up in 2017, reflecting the momentum generated by the implementation of the JCPOA, and declined following the reimposition of U.S. secondary sanctions in 2018.

Source: AEI's China Global Investment Tracker

Source: AEI’s China Global Investment Tracker

Overall, Tehran is currently encountering significant difficulties in getting integrated into the Belt and Road Initiative and, more broadly, China’s financial and infrastructural investments in the region. Lucille Greer and Esfandyar Batmanghelidj highlight that Beijing’s economic engagement with Iran is significantly inferior to that with Saudi Arabia, the United Arab Emirates, and Pakistan, which reflects that “China is absolutely and relatively underinvested in Iran.”

Source: AEI's China Global Investment Tracker

Source: AEI’s China Global Investment Tracker

Yet, even in the case of a return to the JCPOA, it is quite hard to imagine a flood of Chinese capital into Iran. The uncertainty that will remain around Tehran’s short- and medium-term ability to be reintegrated into global financial markets and the political risk may keep deterring China from opening itself to Iran in a way comparable, for instance, to the mature relationship built with the UAE.

Second, the actual budgetary terms of the agreement, implementational provisions, and relative timelines remain vague, if not entirely absent. In March 2021, Zhao Lijian, the spokesperson of the Chinese Ministry of Foreign Affairs, said that the comprehensive strategic partnership “neither includes any quantitative, specific contracts and goals nor targets any third party, and will provide a general framework for China-Iran cooperation going forward.” Farhad Dejpasand, then Iran’s minister of economic affairs and finance, responded that the document merely “sets out the size of interactions between the two countries.” This raised concerns among some Iranian lawmakers that a legally binding agreement between Iran and a foreign country would require parliamentary approval.

The Raisi government, which made the “Look to the East” strategy a core component of its electoral platform, has not presented the agreement to Iran’s Parliament either, seemingly confirming the intention for the comprehensive strategic partnership to remain a broad – and aspirational – framework of long-term cooperation without establishing binding provisions and strict reciprocal commitments. Ultimately, this suggests that the launch of the implementation phase might be an attempt to make some political noise in a critical phase of the Vienna talks to revive the JCPOA rather than a concrete step ahead in the comprehensive strategic partnership.

Last, it is indeed the politics surrounding the China-Iran comprehensive strategic partnership that remain controversial. At the regional level, China keeps signaling that it has little intention to depart from its well-oiled balancing strategy with partners in the region. The January visit of the GCC’s foreign ministers brought back to the negotiation table the long-delayed China-GCC free trade agreement. While the meeting didn’t produce a final deal, it is significant that both the GCC and Iranian delegations left China with the opportunity to show the banner of Beijing’s public commitment to respective seminal agreements. For Iran, though, exhibiting China’s public political support might come off as lacking substance if it is not sustained by tangible advancements in the partnership with Beijing. 

Atlantic Council Nonresident Senior Fellow Jonathan Fulton recently wrote that there is emerging evidence that China is no longer hedging but is actively trying to put a wedge between Washington and the Gulf Arab states. Interestingly, a classic argument explaining Iran’s importance in Beijing’s strategic calculus considers Tehran’s role as a counterbalance to Washington’s hegemony in the region. The interplay of these dynamics is undoubtedly complicated, but in the politics of the China-United States-Iran triangle, Beijing has often treated Tehran as an expendable piece in its chess game with Washington. Little suggests that the launch of the implementation phase of the comprehensive strategic partnership has changed this dynamic.