China’s Role With Iran

Iranian Foreign Minister Mohammad Javad Zarif (R) and his Chinese counterpart, Wang Yi, (C), sign an agreement in the capital Tehran, Iran, on March 27, 2021. China and Iran signed the Iran–China 25-year Cooperation Program in 2021, a partnership that some analysts say deepens Iran’s economic dependence on Beijing. AFP via Getty Images

Commentary

China has officially designated Iran as its primary partner in the Middle East, following the signing of a 25-year cooperation agreement between the two countries in 2021. China relies heavily on Iranian oil; however, if the Iranian regime were to collapse, China could emerge as the biggest loser.

“The ’strategic accord' entails economic, military and security cooperation, even as both countries are under different levels of United States sanctions,” Al Jazeera reported at the time.

This agreement did not come out of thin air. Chinese leader Xi Jinping came to power in 2013, and within three years, China and Iran began discussions.

“The agreement is said to have been in the works since Chinese President Xi Jinping visited Iran in 2016, also agreeing to increase bilateral trade more than 10-fold to $600bn in the next decade,” the report reads.

“It is expected to be a sweeping ’strategic accord' that includes significant Chinese investments in Iran’s key sectors such as energy and infrastructure, in addition to military cooperation.”

The military cooperation is central. Iran provides needed war material, such as inexpensive attack drones, to Russia, and China buys most of Iran’s oil and gas exports, which are needed not only for the Chinese economy but also for the Chinese military.

Chinese Mini-Berlin Airlift to Iran in Progress

There have been reports of Boeing 747 freighters shuttling between China and Iran, which turn off their transponders when approaching Iranian airspace, thereby hiding them from civilian flight tracker websites but not from Israeli radars and fighters.

What was the cargo on the 747s? On the inbound flights to Iran, “China is sending something it doesn’t want the world to know,” China expert Gordon Chang said in an interview on Fox’s “Mornings with Maria” program in June.

“It could be ammunition, could be drones, pretty unlikely about that, but it also could be nuclear weapons,” he said.

The 747 can carry a significant amount of freight, but it can’t “kneel” like militarized transports, such as the American C-17 and C-5, which can accept roll-on and roll-off military equipment. Air China has approximately 10 747s.

The 747 is considered a legacy aircraft and is being retired; however, many are still available at inexpensive prices on the market, so it is not entirely clear how many 747s China actually has. One area where China’s military is still nascent is strategic airlift. China has approximately 80 Y-20s. Additionally, China has approximately 40 IL-76s, which were delivered to the country by Russia in the early 2000s.

China’s Energy Buys Sustain Iran

What is clear is that the Iranian regime has become dependent on Chinese consumption of Iranian energy production. Approximately 90 percent of Iranian energy exports go to China, according to commodities data company Kpler. This oil is considered sanctioned and bought by smaller “teapot” Chinese refineries in violation of sanctions.

China began focusing on purchases of illicit Iranian oil in 2022, as it was able to receive it at substantial discounts and had it priced in Chinese yuan, which further entangles Iran in the consumption of Chinese exports. Without the purchases by China, the already weak Iranian economy would be a desert, undermining the Iranian regime.

The logical question is that if this oil is sanctioned, how is it not being blocked from transport?

The reality is that there is a distinction between sanctions and the enforcement of sanctions. A key element of enforcement could be the U.S. Navy, which could interdict Iranian ghost fleet tankers at the exit from the Strait of Hormuz and the Strait of Malacca by Singapore. However, the U.S. Navy is still struggling with an undersized fleet and over-extended mission around the world.

Another issue is that many of the sanctions are applied against individual ghost fleet tankers, which can easily be resold, renamed, and reflagged by shell companies. One suggestion is to rewrite sanctions to target service providers, such as brokers, flag states, and classification societies.

Claire Jungman, an analyst for the advocacy group United Against a Nuclear Iran, said, “Designating all the ghost fleet and these actors would create an environment where Iran’s capacity to sidestep sanctions becomes unsustainable.”

China Faces Greatest Risks If Iranian Regime Collapses

The Iranian regime consists of Supreme Leader Ali Khamenei and President Masoud Pezeshkian, both of whom appear to be still alive, and the Islamic Revolutionary Guard Corps (IRGC). It is not clear who is leading the IRGC with the relentless Israeli campaign against the leadership.

Last month, dozens of the remaining members of the IRGC senior leadership gathered in what they thought was a secret meeting in a mountain hideout, but Israel waited for them to gather and then struck, eliminating all of them.

China, however, is assessed to be the biggest loser if the Iranian regime falls in some form of collapse or popular uprising. The first factor is loss of prestige. Starting with the 2021 agreement with Iran, the CCP formally anointed its chosen country, Iran, as China’s dominant partner in the Middle East. If the triumvirate led Iran to disintegrate, the Chinese regime would lose its key regional ally.

The second concern is that the CCP would no longer have a trusted proxy leading the proxies of Hamas, Hezbollah, or the Houthis. The first two sub-proxies have largely been eliminated, but the third one remains relatively viable and can still harass the vital shipping chokepoint of the Red Sea, which can be used against European countries that depend on this sea lane.

Third, Iran has also been acting as an arms manufacturer on behalf of China, which has been important to supply Russia with war material while providing some plausible deniability of the Chinese regime’s involvement in Ukraine.

The final point is most damaging to the CCP. China needs Iranian oil—there is little alternative for China if the current Iranian regime were to cease oil exports to China.