How the US-China trade war is a win for Iran

China’s policy toward the Islamic Republic has been increasingly shifting in favor of the Iranian regime rather than the US in recent years, partially thanks to the trade war between Washington and Beijing. This trend is unlikely to change in the near future.

Before the trade war was ignited between the US and China, Washington was generally successful at pressuring and persuading Beijing to side with it against Iran’s nuclear defiance. In fact, China alongside other members of the UN Security Council (Russia, France, the UK, and the US) voted against the Iranian government by passing four resolutions, which imposed sanctions on the Iranian regime from 2006 to 2010. China, which is the world’s largest energy consumer, also agreed to cut its oil imports from Iran during this time.

But since the US-China trade war began under the Trump administration, and as it continues under the Biden administration, Beijing has fewer incentives to yield to Washington’s pressure. The US has recently reached out to China to cut its oil imports from Iran, and one senior US official said: “We have used our sanctions authorities to respond to Iranian sanctions evasion, including those doing business with China, and will continue to do so if necessary. However, we have been approaching this diplomatically with the Chinese as part of our dialogue on Iran policy and think that, in general, this is a more effective path forward to address our concerns.”

But this time, China immediately rejected cutting its oil imports from Iran and complying with the US sanctions. China also demanded the US remove its “long-arm jurisdiction” as China’s Foreign Ministry responded: “We firmly oppose any unilateral sanction, and urge the US to remove the so-called ‘long-arm jurisdiction’ over third-party entities and individuals as soon as possible.”

In another blow to the US, after many years of Iran trying to be a full member of the Shanghai Cooperation Organization, SCO members finally agreed in September to elevate Iran’s status from an observer to a full member despite the Financial Action Task Force — the global financial watchdog — placing Tehran on its terrorism financing blacklist.

Since the trade war began, China has also been using the same line of argument that the Iranian leaders are resorting to when it comes to the nuclear deal. Even though the Islamic Republic is violating all ideals of the JCPOA and stonewalling the nuclear talks, Beijing is blaming the US. Instead of holding Iran accountable, a Chinese Foreign Ministry spokesperson put the onus on the US: “As the one that started the new round of tensions in the Iranian nuclear situation, the US should redress its wrong policy of maximum pressure on Iran, lift all illegal sanctions on Iran and measures of long-arm jurisdiction on third parties, and work to resume negotiations and achieve outcomes at an early date.”

For China, siding with the Iranian regime has several advantages. First of all, Beijing can use Iran as a bargaining chip in its trade war with the US. By assisting Iran, China is also increasing Washington’s foreign policy challenges when it comes to Tehran’s nuclear program.

Secondly, China is profiting from American attempts to isolate the Iranian regime. For instance, a 25-year deal was recently signed between Iran and China. The deal, which appears similar to a colonial agreement, grants China significant rights over the nation’s resources. One of its terms is that China will be investing nearly $400 billion in Iran’s oil, gas and petrochemicals industries. In return, China will get priority to bid on any new project in Iran that is linked to these sectors. China will also receive a 12 percent discount and it can delay payments by up to two years. China will also be able to pay in any currency it chooses. It is also estimated that, in total, China will receive discounts of nearly 32 percent. Another secret element of the agreement has a military dimension: China will deploy 5,000 members of its security forces on the ground in Iran. These concessions are unprecedented in the history of the Islamic Republic.

This strategic and economic deal is a clear win for China. The $400 billion will be invested over 25 years, which is a small amount for the second-largest economy in the world. In return, China will gain full authority over Iran’s islands and access to its oil at a highly discounted rate, and increase its influence in almost every sector of Iranian industry, including telecommunications, energy, ports, railways, and banking. China, incidentally, is the world’s largest importer of oil.

In conclusion, as long as the trade war between the US and China continues, Beijing will be more reluctant to submit to Washington’s demands and pressure the Iranian regime for its nuclear violations. The Iranian regime is clearly the winner of the US-China trade war.
Source: Arab News