July 13, 2010
China-Iran Foreign Relations
Reaction to June 2009 Iranian Presidential Election:
In June, 2009, a spokesman for the Chinese Foreign Ministry, Qin Gang, stated that "China respects the choice of the Iranian people" and expressed hope that "Iran could maintain stability and solidarity" in the face of opposition street protests following the re-election of Iranian President Mahmoud Ahmadinejad. During a June 2009 meeting of the Shanghai Cooperation Organization, an intergovernmental trade and security organization in which China is a member and Iran an observer state, Chinese President Hu Jintao reaffirmed his country's commitment to working with Iran, stating “We are quite confident that friendly and profound economic relations between the two countries should continue forever.”
In January 2010, as political demonstrations against the Iranian regime grew more violent, an Iranian opposition news website reported that Iran has imported advanced armored anti-riot vehicles equipped with water cannons in a rush order from Dalian Eagle-Sky, a Chinese company.
China has shown support for Iran’s right to a peaceful nuclear technology, but has also voted in favor of certain United Nations Security Council (UNSC) resolutions against Iran’s nuclear enrichment program. Like Russia, China abstained from voting in the IAEA Board of Governors in 2005 and voted in favor of sending the issue to the UNSC in 2006. Also like Russia, China voted for United Nations Security Council Resolution (UNSCR) 1696, as well as all of the sanctions resolutions. It also voted for UNSCR 1835 while expressing the desire that the resolution would not lead to more sanctions against Iran. China has called for flexibility and patience in negotiating the issue. Foreign Ministry Spokesman Liu Jianchao stated in July 2008 that China “believe[s] that sanctions, especially unilateral sanctions, are of no help.”
The US and several European countries have accused China of circumventing sanctions against Iran by selling dual-use metals that Iran could use to manufacture advanced weaponry, including long-range nuclear missiles. The US claims that China has been selling tungsten copper (used in building weapons guidance systems) to Iran and that the United Arab Emirates (UAE) has intercepted shipments of aluminum and titanium sheets (which serve as raw materials for missile production) coming from China destined for Iran. The United States has also sanctioned some Chinese companies for selling dual-use chemicals to Iran that it could use in military development rather than the civilian purposes they are intended. In January 2009, a spokesman for the Chinese Foreign Ministry claimed that China has strictly adhered to UN limits on trade with Iran. Some analysts believe, however, that China may have subverted sanctions by selling Iran metals in forms not under sanction; for example, China could legally provide Iran with tungsten copper in powder form, but not in ingot form.
At the September 2009 gathering of the United Nations, China and Russia agreed to support US President Barack Obama in putting the UN on record against the spread of nuclear weapons. China’s deputy ambassador to the organization, Liu Zhenmin, said that the UN should only deal with general non-proliferation matters, however, and should not address specific cases. That same month, the UNSC unanimously passed a resolution laying out military and diplomatic safeguards against the use of civilian nuclear programs for military purposes. The resolution states that nations supplying nuclear material have the legal right to require the return of material if recipient countries withdraw from or do not comply with the nuclear Non-Proliferation Treaty. The resolution also states that any country that halts IAEA inspections will be subject to UNSC safeguards. China’s vote in favor of this resolution notwithstanding, Chinese Foreign Ministry Spokeswoman Jiang Lee reiterated China’s position that sanctions are not the appropriate method to deal with Iran’s nuclear enrichment.
China also voted in favor of a November 2009 IAEA resolution calling for the “full cooperation” of Iran in clarifying its nuclear program. In December 2009, China expressed its hope that Tehran would work with the IAEA to seek a “proper solution to the Iran nuclear issue.” Chinese Foreign Ministry Spokesman Qin Gang indicated that China’s vote was emblematic of China’s position on the Iran nuclear issue and its desire for Iran to resolve the issue through dialogue and negotiation. In response, Iranian Foreign Minister Manouchehr Mottaki sent a letter of protest to Chinese Foreign Minister Yang Jiechi saying, “undoubtedly, the illogical conduct of the countries voting against Iran will make the Islamic Republic of Iran more determined to continue the current path to develop peaceful nuclear technology.”
In December 2009, an anonymous senior US official announced that a meeting by the P5+1 (including the US, Russia, China, Britain, France and Germany) on Iran’s nuclear program had been canceled due to China’s opposition, though the remaining five still planned to talk by conference call. Later that month, representatives from China, along with other P5+1 members, adjourned their telephone consultation about Iran’s nuclear program, however did not announce when they will ask the UNSC to consider measure to increase pressure on Iran. US Ambassador to the UN Susan Rice said that it was premature to discuss possible new sanctions, but the US, Britain, France, Russia, China, and Germany were mulling “a range of alternatives.”
In early January 2010, Iranian Foreign Minister Manouchehr Mottaki warned the West that it had one month to accept Iran’s counterproposal to the October UN offer, after which time Iran would enrich its stockpile of low-enriched uranium to 20%, though it is unclear if the country has the technical ability to accomplish this task. Although Mottaki did not specify the terms of Iran’s counter offer, in the past Iran has suggested a simultaneous uranium swap either on Iranian territory or in Turkey, though the West has rejected this offer as it would not delay Iran’s ability to produce a weapon, should it choose to do so. Mottaki’s comments were broadcast on state television and presented as an ultimatum to the West just two days after Iran missed a deadline set by the US and its partners to accept the proposed UN deal.
Also in January 2010, the head of the Taiwanese company Heli-Ocean Technology Co. Ltd., Steven Lin, announced that they had agreed a request from a Chinese-based firm to procure and send dual-use components to Iran, thus violating UN sanctions. During a UN meeting that same month, Chinese Counselor to the UN Kang Yong blocked a new round of sanctions against the Islamic Republic. Yong said that China was ready to agree to start talks on possible sanctions, but would not agree to any further measures at the time. Western diplomats claimed after the meeting that China is now taking a harder line than Russia in opposing further UN sanctions against Tehran. Robert Cooper, the EU official who chaired the meeting, said that Iran had failed to follow up on the key commitments that it made at its last session with the six powers in Geneva on October 1, 2009, namely, by refusing further meetings to discuss the nuclear issue. Cooper added that the P5+1 was concerned about Iran’s construction of a secret uranium enrichment facility near the city of Qom, its lack of cooperation with the IAEA, and its failure to take up the UN agency’s offer to swap Iranian-enriched uranium for fuel for its Tehran Research Reactor. In response, Iranian Foreign Ministry Spokesman Ramin Mehmanparast said on January 24, 2010, that the major powers will only achieve results in their meetings on Iran if they adopt a "realistic approach" and recognize Iran’s nuclear rights.
In February 2010, China declined to support Western diplomats’ efforts to levy further sanctions on Iran, instead calling for continued negotiations in order to resolve the international stand-off over Iran’s nuclear program. According to a February 22, 2010 statement by Foreign Minister Spokesman Qin Gang, China believes that "relevant parties should step up diplomatic efforts and maintain and promote dialogue and negotiations."
Following a March 2010 meeting with British Foreign Secretary David Miliband, Chinese Foreign Minister Yang Jiechi stated that Beijing believes that further engagement with Tehran should take priority over the imposition of new sanctions. The Chinese minister encouraged “the other relevant parties [to] adopt more constructive measures so as to avoid further deterioration of the situation, and push for the gradual progress in the track of dialogue and negotiations.” Nevertheless, Senior British diplomats have claimed that China would not stand alone against the American and European drive to impose further sanctions, especially if Russia were to give its blessing to the Western initiative. Asked about Miliband’s visit to China during a press conference that same month, Iranian Foreign Ministry Spokesman Ramin Mehmanparast said that he does “not think the trips taken by Western countries' officials to put pressure and impose sanctions on Iran can prove so effective."
Speaking in March 2010, the US ambassador to China, Jon Huntsman, encouraged the country to not allow unrelated tensions to hinder cooperation on the Iranian nuclear issue, saying that "differences on Taiwan and Tibet cannot, must not, prevent us from working together to…prevent Iran from developing a nuclear weapons capability" and added that the US “look[s] to China to support strong sanctions should Iran continue to stall on the dialogue track."
Although the country had repeatedly appeared reluctant to pursue a fourth round of sanctions, China began modifying this opinion in the spring of 2010. Following an April 2010 meeting between French President Nicolas Sarkozy and President Hu, the Chinese Foreign Ministry reiterated the country’s calls for a diplomatic solution to the Iranian nuclear issue, noting, however, that China is “not against the use of a two-way method (talks and sanctions).” Jian Yu, a ministry spokeswoman, further added that “China's basic position is to keep the regime of non-proliferation, peace and stability in the Middle East.” In May 2010, Jiang stated that the Foreign Ministry supports efforts to solve the nuclear diplomatically, adding that China “value[s] and welcome[s] the agreement reached among Brazil, Turkey, and Iran on Tehran's research reactor."
In June 2010, China voted in favor of UNSCR 1929, which placed additional sanctions on Iran, primarily targeting the country’s military and financial sectors. Chinese officials were quick to note that the sanctions were targeted so as to no disrupt "the normal life of the Iranian people" and, according to Foreign Ministry Spokesman Qin Gang, "the fact that the UN Security Council passed the resolution does not mean the door to diplomatic efforts is closed." China’s vote drew heavy criticism from some Iranian officials; the head of the country’s Atomic Energy Organization, Ali-Akbar Salehi , chastised the decision, claiming that "this move by China definitely has an (negative) impact among world Muslims and Beijing might gradually lose its respectable status in the Islamic world and wake up when it is already too late.” Salehi further charged China with hypocrisy, saying that "China supports North Korea, which is not even signatory of the Non-Proliferation Treaty, but adopts a resolution against Iran which is both NPT signatory and all its nuclear projects under the surveillance of the International Atomic Energy Agency." During a visit to Shanghai only days after the vote, however, President Ahmadinejad was more charitable in his comments about China, suggesting that Security Council members had been subject to intimidation.
China’s efforts to target sanctions away from economic activity have encouraged the opinion that the country is unwilling to take steps against Iran that would endanger the development of trade ties. Following a meeting with his Chinese counterpart, President Obama stated that "the Chinese are obviously concerned about what ramifications [a proposed ban on investment in Iran’s hydrocarbon sector] might have on the economy." Following the approval of unilateral US sanctions aimed at Iranian gasoline imports in July 2010, Chinese Foreign Ministry Spokesman Qin Gang noted that "China supports the UN sanctions [and] believes that countries should have correct implementation of the sanctions instead of expanding the sanctions." China is a significant source of Iranian gasoline imports and even expanded gasoline exports to the country as recently as April 2010.
China and Iran enjoy an extensive economic relationship despite UN Security Council sanctions. The two cooperate in various different sectors, including energy and construction. With more than 100 Chinese state companies operating in Iran, Beijing seeks to increase its presence in the Iranian market. China has emerged as a top economic partner of the Islamic Republic, investing heavily in the energy sector and filling the gaps left by Western firms forced out by international sanctions. In 2009, China became Iran's most significant trade partner, with bilateral exchanges worth $21.2 billion compared to $14.4 billion three years earlier. The figures confirm the exponential growth in commercial ties between the two countries, which were relatively minimal 15 years prior, when trade volumes amounted to just $400 million. According to official data, Western sanctions have paved the way for Chinese companies, which last year directly supplied Iran with 13% of its imports ($7.9 billion). In 2009, China imported $3.12 billion worth of Iranian non-oil goods, making it Iran’s second largest export market.
Trade in the energy sector is especially robust with Iran exporting 408,000 barrels of oil a day in 2008, valued at $15.8 billion annually. Furthermore, it is estimated that, between 2005 and 2010, Chinese firms signed $120 billion worth of contracts in the Iranian hydrocarbon sector.
As western countries have decreased their trade and investment in Iran, China and other Asian nations have stepped in to fill the void. In 2008, the China National Petroleum Corporation (CNPC) and the National Iranian Oil Company (NIOC) signed a $1.76 billion deal to develop Iran’s North Azadegan oil field, which could produce upwards of 75,000 barrels of oil per day by 2012. In March 2009, Iran and China signed a $3.2 billion gas deal, in which Iran’s LNG and a Chinese-led consortium agreed to construct a pipeline to extract some 10 million tons of liquefied natural gas from phase 12 of Iran’s South Pars gas field. Soon after, in June 2009, CNPC inked a $5 billion deal with NIOC to help develop phase 11 of the field. The project is designed to produce roughly 2 billion cubic meters of gas and 70,000 barrels of gas condensates daily. CNPC replaced the French energy giant Total after it withdrew from the project.
According to a July 2009 report in the Chinese South Post Morning, Iran has called on China to invest in a series of economic projects worth $42.8 billion, including the construction of seven new oil refineries. China has agreed to several of Tehran’s investment requests, offering to construct ten offshore jack-up drilling platforms, seven land drilling rigs, and two float cranes, at a total cost of $2.2 billion. Energy cooperation increased further in August 2009 when China agreed to a $3 billion deal to expand Iran’s Abadan and Persian Gulf refineries. The projects are expected to take three years to complete. In September 2010, the Financial Times reported that Chinese Sinopec and CNPC have also signed $4 billion in contracts with Tehran to increase production in Iranian oil fields. In November 2009, this figure was expanded when Sinopec signed a tentative agreement to provide $6.5 billion in financing for oil refinery projects in Iran.
While China is a major export market for Iranian crude oil, Iran is forced to import a large quantity of gasoline from the country due to a lack of refining capacity. In September 2009, China increased its gasoline supply to Iran to one-third of total Iranian gasoline imports. J.P. Morgan commodities research estimated that China sends between 30,000 to 40,000 barrels per day to Iran through third party intermediaries. In April 2010, as unilateral US sanctions against Iranian gasoline imports appeared imminent, a subsidiary of CNPC exported 600,000 barrels of gasoline to Iran, worth $110 million. Similarly, that month Iran’s Press TV reported that Sinopec’s trading company, Unipec, agreed to ship some 250,000 barrels to the country via a third party in Singapore.
Iranian Foreign Minister Manouchehr Mottaki indicated in February 2010 that China is keen to join the Pakistan-Iran gas pipeline project. Mottaki claimed work on the gas pipeline project, which initially included India and was known as the Iran-Pakistan-India (IPI) pipeline, would begin soon and that Beijing is likely to join the project. As international pressure against the Iranian nuclear program increased, India became more reluctant to take part in the pipeline project, though Indian officials cited security and the non-viability of the proposed pipeline as the primary reasons for declining to participate. According to a February 2010 opinion poll, a majority of Pakistani surveyed supports China joining the project instead. China has yet to make any firm commitments to the project.
The Iranian North Drilling Company (NDC), a state-run oil firm, contracted with CNPC in March 2010 to purchase an oil rig for use in the Persian Gulf. According to NDC Managing Director Hedayatollah Khademi, the agreement is valued at $143 million with delivery expected within eight months of the signing. Khademi added that his firm expects to order two additional rigs in the near future.
In what the Iranian press has described as “defiance of US pressure” and an “indication of [Chinese] opposition to the US…demands,” Chinese firms significantly increased their presence at Iran’s 15th International Oil, Gas, and Petrochemical Exhibition. The event, held in April 2010, saw Chinese participation grow by roughly 300%, compared to the overall 10% increase in participation.
China is also extensively involved in non-oil and gas segments of the Iranian economy. In May 2009, at a joint economic conference in Tehran, the two countries signed a number of agreements totaling $17 billion in economic cooperation. The agreements stipulated that China assist Iran with its construction sector, host joint trade meetings, and develop Iran’s railway system. Iran will also build a new trade center in China’s majority Muslim Xinjiang province. Furthermore, Chinese officials have expressed their interest in expanding participation in the development of Iran’s titanium deposits and mining infrastructure. According to Amir Talebi, an official with the Trade Promotion Organization of Iran, his country’s principal exports to China consist of “propane, iron ore, polyethylene, aluminum, copper, marble, chrome ore, cast iron, lead, concentrated licorice, and sulfur.” Talebi added that China assists Iran in building dams, shipyards, ports, airports, in mine-development, and oil and gas infrastructure. 
In February 2010, Managing Director of the NIOC Seifollah Janshnaz encouraged China and Iran to conclude new agreements and went so far as to say that his government expects to see bilateral trade reach $50 billion in the “near future.” Iran’s ambassador to China, Mehdi Safari, reiterated the $50 billion goal in June 2010 while speaking at Iran's National Pavilion at the 2010 World Expo in Shanghai. According to the ambassador, trade ties will have to enter into “a new phase” in order to reach the ambitious goal. Safari has made even more grandiose predictions in the past, saying upon his arrival in China in May 2010 that the value of bilateral trade could rise to as much as $200 billion by 2020.
On April 25, 2010, Iranian Finance Minister Seyyed-Shamseddin Hosseini met with his Chinese counterpart, Xie Xuren, during a World Bank summit held in the United States. Hosseini encouraged China to take advantage of opportunities in his country, saying that “there are numerous fields for joint investments in the two countries and Chinese companies can invest in various projects in Iran such as refineries and petrochemical plants.” For his part, Xie complimented Iran’s socio-economic achievements and pledged to visit Iran in the near future.
China has proposed a series of ambitious railroad projects that would connect the country’s heartland with Central Asia, linking China with Iran via Kazakhstan, Uzbekistan, and Turkmenistan. In an effort to deepen transportation ties between the two countries, Iranian Minister of Roads and Transportation Hamid Behbahani met with Chinese Railway Minister Liu Zhijun in June 2010. During their discussions, the Chinese minister welcomed offers by Behbahani, who encouraged China to use Iran’s rail network to connect its own to Europe.
China and Iran have been building a political relationship based on economic and regional cooperation. In October 2009, Chinese Premier Wen Jiabao stated that China would strengthen ties with Iran saying that “the Sino-Iranian relationship has witnessed rapid development, as the two countries’ leaders have frequent exchanges, and cooperation in trade and energy has widened and deepened.” Since 2005, Iran has been an observer of the China-Russia dominated Shanghai Cooperation Organization (SCO), a regional cooperation body consisting primarily of Central Asian states; the SCO is often viewed as an attempt by Eastern powers to challenge US unipolarity. Iran submitted a request in March 2008 to join the organization as a permanent member., In June 2009, the leaders of China and Iran met in Russia during a meeting of the SCO. Chinese President Hu Jintao stated that "Tehran and Beijing should help each other to manage global developments in favor of their nations otherwise the same people who are the factors of current international problems will again rule the world."
In addition to its cooperation with China in the multilateral forum of the SCO, Iran has been supportive of Beijing’s foreign policy goals. Tehran has expressed approval of the one-China policy, which rejects the possibility of a separate and independent Taiwan, and applauded China’s recent anti-secession law, which explicitly stated China’s rejection of an independent Taiwan.
Following July 2009 ethnic riots in China’s Muslim populated Xinjiang province, in which more than 156 people were killed and over 1000 arrested, Foreign Minister Manouchehr Mottaki expressed support for "the rights of Chinese Muslims." On July 9, 2009, President Hu announced that those responsible for the unrest will be "severely punish[ed]." In a July 22 statement, the charge d’affaires of the Chinese Embassy in Tehran, Chen Weiqing, insisted that the June riots in Xinjiang were encouraged by foreign separatist groups and were unconnected to religious or ethnic issues. During his weekly press conference on July 27, 2009, Iranian Foreign Ministry Spokesman Hassan Qashqavi balanced concerns for Muslims with bilateral relations with China. Qashqavi stated that "we hope Muslims' rights would be considered as well as rights of other ethnic groups," however condemned international interference in China’s internal affairs. In August 2009, Foreign Ministry officials from both China and Iran met to review the July ethnic riots, with the Iranian side calling on China to aid in conducting religious services for the country’s Muslim population.
Relations with Iran proved to be a major point of contention between China and the United States during an August 2009 meeting between officials of the two countries. At the meeting, US Congressman Howard Berman criticized recent agreements between Tehran and state-owned Chinese firms to construct several refineries in Iran. According to the US delegation, which urged greater isolation of the Islamic Republic, such agreements are “exactly the wrong signal to send to Iran at a time when Tehran continues to enrich uranium in defiance of the international community.” 
In March 2010, Iranian Minister of Culture and Islamic Guidance Mohammad Hosseini expressed support for an expansion in cultural ties between China and his country, saying that “Iran is ready to hold weeks of film, book and music and set up cultural and arts exhibitions in China with an aim to promote and expand cultural relations…” The minister indicated that Iran is prepared to take “giant strides” to share Iranian culture with China, while hoping that China will do the same in return.
According to the Islamic Republic News Agency, the Chinese-vice minister of foreign affairs, Dai Bingguo, has stressed the strategic importance of Sino-Iranian ties, noting that leaders of both countries are interested in promoting bilateral relations. The vice-minister made the comments during an April 2010 meeting with the visiting Iranian Supreme National Security Council secretary, Saeed Jalili, who expounded on the Dai’s statement, claiming that cooperation between the two countries will prove valuable in the “removal of the vacuums of regional security.” At Jalili’s departure, Head of the Department of Asian and West African Affairs of the Chinese Foreign Ministry Song Aiguo hailed the secretary’s visit as a "precious chance" to improve mutual and further consultations over international developments.
In June 2010, President Ahmadinejad ended a three-nation tour in Shanghai, where he participated in Iran’s National Pavilion day at the 2010 World Expo. Although the visit came only days after China voted in favor of additional sanctions against Iran, the president nevertheless praised bilateral ties with China, saying that "we have very good relations with China and we have no reason to weaken our relations with China.... The problem is the United States.”