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China and the Iranian Nuclear Crisis
Jing-dong Yuan, The Jamestown Foundation, China Brief
3/23/2006

On Tuesday, January 31, China and Russia joined the United States, Britain, France, Germany and the European Union in reaching an agreement to report Iran’s nuclear activities to the United Nations Security Council (UNSC), which in turn will take up the matter in March after the International Atomic Energy Agency (IAEA) submits its formal report to the Council. The decision was a compromise between the U.S. and other European powers, which have been seeking immediate IAEA referral, and Russia and China, which still want a diplomatic solution to the pending nuclear crisis.

Tuesday’s decision presented a united front from the major powers. Yet the compromise language also indicates divisions on how to resolve the issue. Chinese Foreign Minister Li Zhaoxing called for continued efforts to resolve the issue through dialogue. Indeed, it remains unclear how China will vote on the issue of sanctions at the UNSC should Iran refuse to heed the call to suspend its uranium enrichment activities. In coming weeks, Beijing will be carefully calculating a final decision that balances its energy security interests, its relationship with the United States and other Western powers, and its image as a responsible rising power on the global stage.

China’s Reaction to the Crisis

The Iranian nuclear standoff dramatically escalated this year on January 10 when Iranian officials broke the IAEA seals on equipment at the Natanz facility to restart small-scale uranium enrichment activities, ending a two-year suspension of its enrichment program. The international response was swift and unequivocal. The EU-3 —Britain, France, and Germany, which had over the last two years been engaged in protracted negotiations with Tehran to look for a solution to the Iranian nuclear issue—immediately suspended planned talks and together with the United States, called for an emergency session of the IAEA Board of Governors (BBC, January 26).

China’s reactions, on the other hand, have been rather measured if not completely indifferent. While expressing concerns over the Iranian nuclear crisis, Beijing has called on the EU-3 and Iran to resume negotiations. Kong Quan, Foreign Ministry spokesman at a January 12 press conference, stated that China hoped that Iran should do more to enhance mutual trust for resuming the talks (Chinese Foreign Ministry press release, January 12). Meeting with Ali Larijani, secretary of the Iranian Supreme National Security Council and Tehran’s top nuclear negotiator, Chinese State Councilor Tang Jiaxuan expressed his concerns over the worsening nuclear tension and emphasized that “all parties concerned should step up diplomatic efforts to create favorable conditions for the resumption of talks on the Iranian nuclear issue” (Xinhua, January 26).

Meanwhile, Beijing has indicated its opposition to the use of sanctions against Iran and emphasized that the dispute should be resolved within the IAEA framework through negotiation. China also suggests that member states to the Nuclear Nonproliferation Treaty are entitled to peaceful use of nuclear technology, so long as they comply with the nonproliferation provisions. “We oppose the habitual use of sanctions, or threats of sanctions, to solve problems. This only complicates problems,” reiterated Foreign Ministry spokesman Kong Quan at a January 26 press conference. On this last point, Beijing and Moscow hold similar views. Indeed, China has endorsed a Russian offer to enrich uranium for Iran as a way to defuse the crisis and thus avert a possible showdown on the sanctions issue at the UNSC (Chinese Foreign Ministry press conference, January 26).

Beijing Weighs its Veto Power

China is facing a dilemma on how it will vote on the Iranian nuclear issue. Beijing wants to be seen as a responsible rising power supporting the principles of nuclear nonproliferation, while trying to maintain an amiable relationship with Iran to protect its important energy interests in the oil-rich country. Yet China also does not want to strain its ties with the United States and other major Western powers. The following weeks will test China’s diplomatic aplomb, as it may be forced to make difficult choices. Five factors could likely influence Beijing’s decision.

The first is the growing Sino-Iranian relationship. As a country that increasingly depends on imports of oil and natural gas to sustain ever-growing domestic demands critical for continued economic growth, China has in recent years developed close economic ties with Iran, in particular in the areas of energy development and supplies. Iran is the second largest source of oil imports for China, accounting for 13 percent of total imports, and the two countries in October 2004 signed a preliminary memorandum of understanding worth $70 billion that allows China National Petroleum and Chemical Corp (Sinopec) to develop Iran’s Yadavaran oil field. Earlier last year, China had also agreed to buy $20 billion worth of liquefied natural gas from Iran for 25 years (China Petrochemical InfoNet, October 30, 2005).

China’s increasingly aggressive bidding for Iran’s energy development rights has been amidst other acquisitions by equally energy-hungry Asian countries such as Japan and India. Japan’s Inpex Corp, for instance, won 75 percent of the development rights to the Azadegan oil field in a February 2004 deal worth $2 billion. India, on the other hand, has concluded a $40 billion deal with Iran to develop Iranian oil fields and import natural gas (Japan Times, August 18, 2005; Asia Times, January 11, 2005).

The growing Sino-Iranian economic ties have been driven by their complementary trade patterns. In exchange for Iranian oil and natural gas, Chinese companies, including the large conglomerate NORINCO, provide Iran with machinery and consumer electronics, in addition to building power stations, highways and mass transportation infrastructure. Bilateral trade could reach $8 billion in 2006 [1].

Beijing and Tehran have also developed a close political relationship in recent years. The two countries have maintained regular high-level visits. In June 2000, Iranian President Seyyed Mohammad Khatami visited China and the two countries signed a joint communiqué. In January 2001, China’s then-Vice President Hu Jintao visited Iran; a year later in April 2002, then-President Jiang Zemin also paid a visit to Iran (Zhongguowang, April 19, 2002). The warming relationship has been partly driven by both countries’ concerns over what Beijing and Tehran consider “power politics” in international affairs and China’s need to maintain stable relationships with Islamic countries in dealing with separatist groups in Xinjiang. Indeed, Beijing has sought cooperation in preventing terrorist organizations in Islamic countries from providing support to separatist groups operating within China. In July 2005, Iran (together with India and Pakistan) was granted observer status in the Shanghai Cooperation Organization, a regional security arrangement aimed at combating terrorism, extremism, and separatism in which China is a major member. Chinese support of Iran’s accession clearly reflects this strategic thinking (Radio Free Europe, July 13, 2005).

Second, Beijing’s resistance to using economic sanctions also reflects long-held principles of non-intervention in countries’ internal affairs. In addition, and in more practical terms, China has to think of the impact of its endorsement of, or failure to block, economic sanctions against Iran on its other energy partners such as Sudan, Venezuela, and Angola. Siding with Western powers against Iran could set a dangerous precedent that could damage China’s relations with southern developing countries.

The third consideration is China’s relationships with the United States and the European Union. Beijing has been taking the lead in defusing the North Korean nuclear crisis through the Six-Party Talks, winning praises from Washington and the international community. This has strengthened Sino-U.S. relations. Notwithstanding the importance of Iranian oil supplies, China can ill-afford alienating the United States, where it has much larger stakes in trade, investment, and technological exchange. Beijing also needs Washington’s cooperation in reining in the independence elements in Taiwan, as well as working out differences with Tokyo. A dark cloud could hang over President Hu Jintao’s upcoming April visit to the U.S. if the two countries get into an open bickering match over the Iranian nuclear issue. Likewise, China needs a good and stable relationship with the European Union for expanding trade and investment, and in order to persuade the EU to lift its arms embargo imposed against China in 1989.

Moreover, blocking EU- and U.S.-led efforts against Iran could greatly tarnish China’s image as a rising great power, especially since Iran is clearly in defiance of the international community’s pleas and Iranian actions further undermine the integrity of the international nuclear nonproliferation regime.

The fourth factor is how Russia will act on this issue. Beijing and Moscow both want to see the Iranian crisis resolved through diplomatic means to protect their growing economic interests. China has deferred to Russia to take the initiative in recognizing Moscow’s greater influence over Iran as well as to avoid the uncomfortable limelight and the potential awkwardness of being the lonely power frustrating international action. After the Tuesday decision, Chinese and Russian officials have been dispatched to Iran in a joint effort to persuade Tehran to reduce tensions. Chinese analysts have also proposed that the Shanghai Cooperation Organization intervene as an interlocutor to address the Iranian nuclear issue now that the EU-Iran process is deadlocked (Xinlangwang, January 23). A possible decision by Russia to either endorse or not to block calls for a UNSC resolution on sanctions would place China in an awkward position.

Finally, how China then will vote depends also on the extent and form of the sanctions. Any attempt to introduce a resolution calling for a boycott of Iranian exports will likely encounter strong Chinese resistance, including a veto threat. On the other hand, an embargo against nuclear and dual-use technologies to Iran could see Beijing exercise its right to abstain from voting. A Council chairman statement expressing serious concerns over Iranian nuclear activities and calling for Tehran to suspend such activities probably could receive Chinese endorsement.

For all these reasons, it is not difficult to see why Beijing is eager to seek out a diplomatic solution to the current crisis. Raising the issue of sanctions at the UNSC would force China to veto or abstain from voting. Should sanctions be adopted, China will have to comply, thus putting its important energy security interests in jeopardy, as well as damaging the wider political and security dimensions of China’s relations with Iran. Political and economic stakes are high.

Notes

1. “NORINCO secures contract to build express line in Iran,” April 24, 2005. http://www.norinco.com/c1024/chinese/newscenter/content_23.html; see also, “Sino-Iranian trade to hit $8 bn by 2008,” November 23, 2005. http://www.iranmania.com; John W. Garver, “Ancient Partners Building a Post-Imperial World,” edited transcript of presentation at the Woodrow Wilson International Center for Scholars workshop on Iran-China relations, July 14, 2005. http://www.wilsoncenter.org/events/docs/garvertranscript.doc

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