China fights for Iran deal to fulfill its own geo-economic interests

Helping ensure the survival of the Iran nuclear deal presents China with the opportunity to raise its profile in international affairs and to set the tone in the nuclear non-proliferation debate.

The Chinese government was clearly relieved when US President Donald Trump decided last Friday to leave the nuclear deal with Iran intact – at least for now. Chinese foreign ministry spokesman Lu Kang said that all parties should “cherish” the hard-won deal and keep in mind the “larger picture” and “long-term interests.” He also voiced Beijing’s displeasure with the new sanctions the Trump administration imposed outside the Iran deal framework. In a clear reference to the new measures, Lu stressed that China opposes unilateral sanctions emanating from the domestic laws of “relevant countries.”

Trump has given the backers of the Iran deal a 120-day ultimatum to fix what he calls “disastrous flaws” in the pact. Both the EU and China will do all they can to save the Joint Comprehensive Plan of Action (JCPOA) as the Iran deal is officially called. China’s desire for the deal to survive arises from three main factors: a wish for stable relations with the United States, the challenge posed by a nuclear North Korea, and Beijing’s high priority Belt and Road Initiative. Should the Iran nuclear deal withstand US pressure, China looks set to gain geopolitical influence thanks to facilitated economic exchanges. Should the deal fail, China risks losing geo-economic stability in a region that is key to its own strategic interests.

Beijing tries to push back against Trump

Ever since Trump put the future of the JCPOA in jeopardy last October, when he decided to disregard Iran’s compliance with the deal, China has tried to push back more strongly against the United States.

Unlike previous, more muted rebuttals over North Korea, Beijing publicly admonished the Trump administration for threatening to decertify the Iran deal. The official Xinhua news agency noted last October: “To protect the non-proliferation regime, especially when the nuclear issue on the Korean Peninsula is at a fever pitch, all parties to the Iranian nuclear agreement need to preserve the legacy of negotiations and insist on the pact's strict implementation.” Moreover, Washington should "check its fetish for unilateral [action] and shift to a new, more inclusive approach in handling global nuclear issues.” The consequences could otherwise be catastrophic, the article warned.

A similar rhetoric was used in November 2017 when Trump imposed sanctions on Chinese companies over their trade with North Korea. China then also issued a statement refuting unilateral sanctions based on United States’ domestic rules and regulations. More recently, Chinese party-state media called Trump’s remarks about anti-government protests in Iran hawkish and criticized his rhetoric for complicating the prospects of the nuclear deal.

According to the Chinese policy community, the nuclear deal with Tehran is important well beyond Iran’s borders. It could help curb the development of nuclear weapons programs in other countries as well, including Saudi Arabia, by providing a template for nuclear diplomacy. This is of central importance to China, since its investments, not only in Iran, but also in Central Asia and South Asia, could be affected by a spill-over of nuclear tensions. Chinese state media have repeatedly underlined that a potential failure of the JCPOA would not only reduce faith in the global non-proliferation regime, but could also make countries like North Korea even less inclined to resolve nuclear disputes through similar negotiations.

Why China needs a stable Middle East

More importantly for China, a failure of the agreement would damage significant economic relations with Iran, which were greatly expedited by the lifting of sanctions. Here, China’s main interests are its own domestic energy security and access to Iran’s large consumer market.

China is keen to establish a stable environment that will benefit its infrastructure investments in the region. This, in China’s view, rests upon normalizing Iran’s relations with the United States and Europe and on furthering Iran’s economic integration. In this respect, the Iran deal’s survival is inextricably linked to Beijing’s Belt and Road Initiative (BRI). According to China’s calculations, the development opportunities BRI will provide may alleviate poverty and thereby reduce tensions in the Middle East. Therefore, in contrast to hesitant European investors, China has continued to pour investments into Iran. The latest example was a 538 million USD railway deal.

Although China views it as in its strategic interest to play a more active role in the Middle East, it is reluctant to become adversely embroiled in the region and seeks to avoid a military conflict (threatened by Trump if UN sanctions do not curb Iranian missile and nuclear tests), at all costs. The unpredictability of political developments in the Middle East, volatile oil prices, the war in Syria, deteriorating Saudi-Iranian relations, and Iran’s domestic power struggle between the more China-friendly conservatives and the somewhat more sceptical moderates – all this could jeopardize the stability China desires.

Therefore, at least for now, China still needs the United States to manage the power balance in the region. The Trump administration’s stance on the nuclear deal is thus cause for concern and compels China to find novel ways to cooperate with the United States on non-proliferation issues like nuclear security and export controls.

China benefits from US attacks on multilateralism

However, the United States’ recent actions on Iran and other issues also offer reputational benefits to China. Beijing has taken the opportunity to raise its own profile as a responsible player in multilateral frameworks. Indeed, the United States acting as a saboteur of multilateral cooperation and Trump’s inflammatory statements are facilitating Xi Jinping’s plan to move China “closer to center stage.”

This is also true for the non-proliferation framework. In sharp contrast to Trump’s calls for a nuclear arms race, Chinese president Xi Jinping posited a year ago at the UN that over time "nuclear weapons should be completely prohibited and destroyed.” It is worth mentioning though that both countries have not signed the UN Treaty on the Prohibition of Nuclear Weapons of July 2017, and that China insists on the right of states to pursue nuclear technologies for the sake of self-defense and development.

The outcome of the tussle over the Iran nuclear deal will be a test for China’s ability to establish itself as a lead player among the upholders of multilateralism. A lot is at stake for Beijing. China’s challenge will be to not endanger its economic relations with either the United States or Iran. A deterioration of the political situation in the Middle East would be the worst possible outcome for China, as it could gravely interfere with Beijing’s own plans to expand is geopolitical and economic reach.

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