China’s Policy Toward Iran And The Middle East

Ed. Note: President Obama has returned from his first Asian trip, including meetings in China. It is worth reviewing the recent history of Chinese foreign economic and military policy toward Iran and other countries of the Middle East to assess the extent to which China might be willing to coordinate its policies with the United States to achieve mutually satisfactory ends. Or, to assess whether mutually satisfactory ends exist at all.

Ed. Note: President Obama has returned from his first Asian trip, including meetings in China. It is worth reviewing the recent history of Chinese foreign economic and military policy toward Iran and other countries of the Middle East to assess the extent to which China might be willing to coordinate its policies with the United States to achieve mutually satisfactory ends. Or, to assess whether mutually satisfactory ends exist at all.

Taipei-based, Dr. Parris Chang is President of the Taiwan Institute for Political Economic and Strategic Studies and Professor Emeritus of Political Science of Pennsylvania State University. His former positions include Representative of Taiwan’s Trade Mission to Bahrain, Deputy Secretary-General of Taiwan’s National Security Council and Chairman of the National Defense Committee and of the Foreign Relations Committee of the Legislative Yuan (Taiwan’s parliament). His publications include Power and Policy in China, If China cross the Taiwan Strait (coauthor and coeditor), and scores of articles in academic and popular journals in the U.S., U.K., Japan, Hong Kong and other countries.

Dr. Chang’s thesis is that China has been developing military and trade relationships in the Middle East that will come at the expense of American interests.

November 24, 2009

Beijing’s policy toward the Middle East has evolved as the People’s Republic of China (PRC) has risen in power and as the Middle East and the rest of the world has undergone economic and political change. Through much of the Cold War period, the PRC had few diplomatic partners in the region and was relatively inactive there. Its interests were primarily ideological and its propaganda focused on China’s revolutionary credentials, presenting the PRC as the natural ally of the anti-colonial and anti-imperialist Arab states. Beijing’s virulent attacks were directed not only at what it considered Western colonial and imperialist control and exploitation, but also at the revisionist Soviet collusion with the United States.

From the late 1970s, Beijing’s operations in the Middle East became more pragmatic and pluralistic, transcending ideology. As the PRC grew in economic and diplomatic strength, Beijing became increasingly keen on expanding its influence and asserting its interests in the region, seeking to shape geopolitics in its favor.

Since the 1980s, China’s burgeoning economy in the wake of Deng Xiaoping’s crusade for “opening and reform” has generated two additional major policy priorities in the Middle East. One is the development and consolidation of energy resources. The other is pursuit of investment opportunities and consumer markets for Chinese goods.

China’s Strategic Objectives and Sino-Iranian Partnership

The international community and academic circles have paid relatively little attention to China’s policy toward Iran specifically and the Middle East in general, despite the fact that Beijing’s role has been expanding and influence has grown significantly since the 1990s. This is partly because Beijing has chosen to adopt a low profile and has been careful not to overplay its hand.

Since the ouster of the Shah of Iran in the 1970s, Beijing has viewed the Islamic Republic as a potential political ally and has sought to cultivate and forge a strategic partnership with Teheran. In addition to being a major source of energy, Iran is an important geopolitical player, capable of playing a leading role in the diplomatic balance in the Gulf region and Middle East, hence a highly valuable anti-Western partner for China. Both China and Iran share the belief that “the enemy of my enemy is my friend,” and have cooperated to challenge and counterbalance what they see as attempted U.S. hegemony in the region.

One instrument China has utilized almost to perfection is the transfer of arms and weapons technology, which greatly adds to China’s ability to win friends and enhance its influence quickly, while earning billions of dollars each year. In some cases, Beijing has adopted an “arms for oil” formula, providing weapons in exchange for oil from Iran (and Sudan). China’s extensive sales to Iran since the 1980s have bolstered Iranian military and weapons production capabilities considerably, with long term and far reaching consequences for the balance of power in the Middle East. Iran arms and sponsors terrorist groups in Iraq and the other Gulf States and is a well-known patron of Hezbollah guerrillas in Lebanon (sometimes in cooperation with Syria),[1] hence a major threat to the Arab States and Israel, as well as the U.S.[2]

Iran’s acquisition of advanced conventional weapons from China has also poses a serious threat to American ships and troops in the Persian Gulf. In the fall of 1987, Iran fired Chinese-made Silkworm cruise missiles, at two U.S. oil tankers in the Gulf. In the 1980s, PolyGroup, a Chinese arms company controlled by the People’s Liberation Army (PLA), exported more than $1 billion worth of Silkworms to Iran.[3] The Chinese Eagle Strike, a much more sophisticated and dangerous weapon modeled on the French Exocet, succeeded the Silkworm in the 1990s. The new cruise missile has two versions, a solid-fuel, rocket-powered model (designated C-801 by NATO) and a longer-range turbojet-powered model (C-802). In 1996, Iran obtained Houdong fast patrol boats equipped with the C-802. In the late 1990s, two of the Iranian Houdong missile patrol boats carried out simulated high-speed attack against the U.S. aircraft carrier USS Kitty Hawk and the cruiser USS Cowpens.[4] Similar Iranian provocation occurred again in the summer of 2008.

Iran has repeatedly vowed a crushing response to any foreign attack and flexed its military muscles by holding war games to show off an array of weaponry and missiles. The supreme leader Ayatollah Ali Khamenei has warned that Iran would target U.S. bases and ships in the Gulf-as well as Israel-if it were attacked.[5]

Indeed, there are acute worries in the Gulf region and elsewhere that Iran could cause a global economic catastrophe if it carried out its repeated threat to close the Strait of Hormuz. A horseshoe-shape of water that stretches between Iran and the northern tip of Oman, the Strait of Hormuz is the only way into and out of the Gulf. According to The Gulf, a Bahrain business weekly, on a typical day approximately 50 tankers carrying 14-17 million barrels of oil and oil products pass through the 180 km-long waterway; roughly 40 percent of the world’s internationally traded oil supplies.[6]

Iran has a large number of Chinese made C-801 and C-802 anti-ship missiles deployed in coastal batteries along the eastern shore of the waterway, aboard ships and on islands in the Strait. These missiles are expected to play a key role in any effort to block or control the waterway.[7] The narrow shipping lane is ideal for the use of anti-ship missiles, as naval or civilian vessels have little room for evasive action. Over the past several years, U.S. coalition naval forces in the Gulf and the Arabian Sea have conducted a series of exercises aimed at countering possible Iranian attempts to close the Strait of Hormuz whether the Iranians use large swarms of small, high-speed armed craft or maritime suicide attacks.

Iran claims it has amassed a fleet of 1,000 low-tech speedboats to counter the U.S. Fifth Fleet’s armada of 30-40 high-tech warships. Broadsides of cruise missiles would be more dangerous. Iran has three frigates and 20 fast attack craft including Chinese-supplied Houdong boats, capable of mounting such attacks.

In 2008, Iran also test-fired its Shahab-3 missile, which it says put Israel within range.[8] Such an intermediate range ballistic missile and much longer-range versions, the Shahab 4 and 5, are under development with China’s assistance.

In February 2009, U.S. media reported that Iran had successfully launched its first so-called domestically produced satellite-an indication that Iran had made considerable progress in its ballistic missile system.[9]

It should be emphasized that the Sino-Iranian cooperation on arms deals is not confined to conventional weapons, but also includes nuclear weapons technology, biological weapons and chemical weapons (NBC weapons; or weapons of mass destruction-WMD). Whereas Beijing has vehemently denied the selling WMD and ballistic missile technology to the rogue states, international intelligence agencies have collected information that identifies China as the world’s “leading proliferator.”[10] For diplomatic and other important reasons, the U.S. and EU rarely blow the whistle on China’s illicit arms sales to rogue states or its violations of international anti-proliferation goals.

There are exceptions, however. On June 25, 2008, the top Asia policy official at the Pentagon told the House Armed Services Committee that Chinese firms have repeatedly violated UN sanctions which ban the sale of weapons, military equipment and nuclear technology to Iran, and “China’s willingness to cooperate on these is uneven.”[11] James Shinn, Assistant Secretary of Defense for Asian and Pacific Security Affairs, said he was particularly concerned over China’s sales of weapons to Iran, accusing Teheran of supporting militant groups in Iraq, Lebanon and Afghanistan, “that target and kill Americans and our allies.”[12]

From time to time, the U.S. has imposed sanctions on Chinese companies for selling Iran weapons, weapons-related products and other dual-use commodities. What follows is the latest report by Daniel Wagner who has closely followed China’s help to Iran’s nuclear program:

Manhattan District Attorney, Robert Morgenthau recently uncovered illicit Iranian finance and procurement network providing unmistakable evidence that Iran is attempting to produce weapons of mass destruction. In a case against a Chinese company attempting to thwart financial sanctions against Iran, the DA uncovered a listing of items used for converting uranium into plutonium and a plethora of materials used for long-range missile production and guidance.[13] The Senate Foreign Relations Committee corroborated Morgenthau’s findings and stated Iran could have enough weapon-grade material to produce a bomb in just six months.[14]

Beijing Sabotages UN Sanctions against Iran

Some Western observers regard China, a long time ally of Iran and a major buyer of Iranian oil and gas, as key in persuading Iran to give up its sensitive nuclear work. In reality, however, Beijing has its own agenda toward Iran and the Middle East and has been reluctant to consider steps that might hurt its strategic ties with Iran and endanger its crucial energy and economic interests.

China has been on record opposing UN sanctions against Iran (and North Korea and Sudan) over the years. On September 6, 2008, Chinese President Hu Jintao urged world powers to show flexibility to resolve a prolonged standoff over Teheran’s nuclear program, when he met President Ahmadinejad after the Iranian president arrived in Beijing for a one-day visit to attend the opening ceremony of the Beijing Paralympics. Hu said China respected Iran’s right to the peaceful use of nuclear energy and called for further diplomacy. “At present, the Iran nuclear issue is faced with a rare opportunity for the resumption of talks, and we hope all parties concerned could seize the opportunity and show flexibility to push for a peaceful settlement of the issues,” Xinhua news agency quoted Hu.[15] “China, as always, will be committed to pushing for the settlement of the issues through peaceful negotiations, and will continue to play a constructive role toward this end,” Hu added.

According to Xinhua, the Iranian leader told Hu that he hoped a solution acceptable to all parties could be found, “and that the Iran side is willing to keep exchanges and consultations with the Chinese side.”[16]

Iran has withstood the three rounds of limited UN sanctions imposed thus far. While China voted for these sanctions, Beijing’s calculations are complex and intriguing. By agreeing to limited sanctions, China wanted to show the U.S. and the international community that China is a “responsible stakeholder” on the issue of nuclear non-proliferation, while hoping to reduce the threat of a U.S. or joint U.S.-Israel armed attack against Iran.

On the other hand, Iran can count on China (and Russia) to delay, obstruct, and water down any harsher measures sought by the U.S. and the EU. If past experience serves as a guide, the fourth round of UN sanctions against Iran would be an ordeal, consuming months of negotiations and haggling and the end result might be another toothless resolution.

Sino-Iranian Energy and Economic Ties

In response to U.S. pressure, some European energy companies have cut their trade with Iran or withdrawn their investments. Royal Dutch Shell and Repsol of Spain withdrew last year. In early July 2008, French oil giant Total announced that it would pull out of a planned investment in a huge gas project in Iran’s South Pars gas field. As Western companies have moved out, Chinese firms have stepped in to fill the void and take the business.[17] On July 28, 2008, Iran’s Pars Oil and Gas Company and China National Offshore Oil Corp. announced an agreement to exploit North Pars gas field, and plan to start to sell the gas from the North Pars gas field in international markets soon.[18]

China is Iran’s top oil market. Iran is China’s third-largest supplier, behind only Angola and Saudi Arabia, exporting about 300,000 barrels of oil to China. Moreover, China’s oil giant, Sinopec Group, is planning to buy 250 million tons of natural gas over the next 30 years from Iran, and will help Iran develop its huge Yadavaran oil field in exchange for Iran’s commitment of 150,000 barrels of oil per day to China for 25 years at market price.[19]

In addition to energy, China is extensively involved in many areas of Iran’s economic development. To help develop Iran’s economy, empower it, and open up consumer markets for Chinese-made goods as well as investment opportunities have become China’s major policy priorities. More than 100 Chinese state companies are working in Iran to help build infrastructure projects-highways, ports, shipyards, airports, dams, steel complex and more. [20], When Teheran’s subway was completed in February 2000, Chinese Foreign Minister Tang Jiaxuan was present for the ribbon-cutting ceremony. Likewise then-President Jiang Zemin made a state visit to Teheran April 18-22, 2002 to cement ties with Iran. According to Iran’s state news Agency, Jiang and Iran’s president Mohammad Khatami witnessed the signing of six cooperation agreements covering oil, gas, trade, transportation, information, technology, and educational exchange. [21]

A visitor to Teheran in recent years would be impressed by the supply of inexpensive Chinese products in the supermarkets and department stores. Two-way trade reached $11 billion in 2008, easily surpassing the $9.5 billion in 2007. China is Iran’s second largest trading partner, behind only the UAE. It goes without saying that Beijing has not enforced UN sanctions.

China, Iran and Russia have overlapping interests on many issues. They are partners to the Asian Energy Security Grid, an alternative to what they see as U.S.-led Western control of the world’s energy resources. Iran has also joined the Shanghai Cooperation Organization (SCO) as an observer. The organization is largely a Chinese tool to counter U.S. presence in Central Asia and promote Beijing’s interests. President Ahmadinejad has attended the SCO annual summit meeting-2006 in Shanghai, 2007 and 2008 in Central Asia, where he met regularly with Chinese president Hu Jintao.

China and the Middle East

Beijing policy toward Iran epitomizes its policy toward other major states of the Middle East region, with some variations.

Arms sales, especially missiles and related military assistance, have been a very effective instrument in Beijing’s efforts to make inroads into the Middle East. This approach, in addition to earning valuable foreign exchange, has helped the PRC to foster diplomatic and strategic ties with Iran, Syria and Saudi Arabia.

During the Cold War, Syria maintained close ties with the Soviet Union and was seen as Moscow’s agent in the Middle East. However, in the waning days of the Cold War, Moscow’s refusal to augment Syria’s missile capabilities with a long-range capability provided an opening for China to extend a helping hand by exporting intermediate range ballistic missile systems and related technology to Syrian in the late 1980s and early 1990s. This was a significant breakthrough for the Chinese military diplomacy in the Middle East, modeled after the earlier Sino-Iranian cooperation.[22]

Likewise, China exported intermediate range ballistic missile systems and related technology to Saudi Arabia in the late 1980s. Taking advantage of a Congressional veto that blocked the sale of advanced American missiles to Saudi Arabia, China filled the void and scored the related diplomatic gains. In July 1990, the Saudis cut off official ties with Taiwan and switched diplomatic recognition to Beijing.

Beijing’s decision to export advanced missiles to Syria and Saudi Arabia were not cost-free. The U.S. imposed sanctions on China on the sale of computers under the auspices of the 1987 Missile Technology Control Regime (MTCR). [23] Despite Chinese denials, China remains a major supplier of arms to various rogue states, albeit largely low key and sub rosa.

Since the 1990s, Beijing’s approach toward Syria and Saudi Arabia has diversified and become more pragmatic. In addition to arms sales, China attaches greater significance to market access, exports of Chinese made goods and investment opportunities. China’s investments in Syria include electricity, construction, agriculture, telecommunications, transportation and tourism. Sino-Syrian trade reached $1.87 billion in 2007, up almost 33 percent from 2006, and the 2007 figure is expected to double by 2011. [24] Whereas the overall trade volume is relatively small compared with China’s trade relations with Iran and Saudi Arabia, China has become Syria’s single largest trading partner.

The quest for energy resources is one of China’s top policy priorities in the Middle East, and Beijing’s relations with Syria are no exception. Although Syria has only modest oil reserves, in recent years China’s oil companies have invested large sums to modernize Syria’s aging oil and gas infrastructure in a joint venture with Syrian energy firms in oil and gas exploration and oil refinement. In September 2008, the China petrochemical corporation made a $2 billion purchase of Canada’s Tanganyika Oil Company, a firm with major operating interests in Syria’s oil industry. [25]

Over the past five years, China’s relations with Saudi Arabia have expanded dramatically, primarily centered on oil-Saudi Arabia being China’s largest oil supplier in the Middle East. However, there is also significant trade in arms and military hardware, construction material and cheap engineering labor. [26]

Saudi Arabia is China’s largest trading partner in West Asia and North Africa, while China is the kingdom’s fourth largest trading partner. In the first quarter of 2007, Saudi-China trade registered a year-on-year increase of 77.4 percent to reach $8.5 billion. [27]

China’s burgeoning relationship with Saudi Arabia has been reinforced by the exchange of high-level state visits. President Hu Jintao visited Saudi Arabia in February 2009-his second visit to the kingdom in less than three years, which underscores the importance Beijing and Riyadh attach to the bilateral relationship. In January 2006, King Abdullah, on his first overseas travel after ascending the throne, went to Beijing – the first Saudi king to visit China. Riyadh was the first stop for Hu after a Washington visit and an embarrassing reception at the White House by President George Bush.

Although Saudi Arabia has developed a close relationship with China, China needs Saudi Arabia more than Saudi Arabia needs China. China’s efforts to forge significant and multifaceted ties with the Saudis reflect the increasing complexity of China’s policy calculus that transcends pure ideological concerns.

China and Israel

China’s dealings with Israel provide one key to understanding the increasing complexity of China’s policies in the Middle East. In the 1980s, China took a calculated risk by exchanging diplomatic missions with the Jewish State, a decision that was not well received by Beijing’s traditional Arab and Iranian allies and partners. It was however, a signal that Beijing’s strategic thinking extended beyond the issues of energy security and market access.

Although China had become a major source of arms for the Middle East, what China has sought and obtained from Israel was sophisticated military technology to enhance its own military capabilities.

One very public case was Israel’s agreement in 2004 to upgrade an anti-radar drone called Harpy it had sold to China in 1994. The upgrade came after Israel had told the U.S. that it had ceased to provide new military technology to China. In another example, the design of China’s J-10s (a new generation of fighter plane) contains technology used in the development of the Israeli Lavi strike fighter prototype, which Israel is believed to have sold to China.[28] A series of reports surfaced claiming China was prepared to sell both Iran and Syria its J-10 fighter jet.[29] This has not yet materialized, but many other kinds of weapon systems that China has exported to the Middle East and elsewhere are said to have been copied from Israeli systems.

No doubt, China’s national security interests were well served by Israeli transfer of military technology. But the ensuing disapproval of Israeli policy by the United States, including with withholding of technology agreements, caused Israel to largely end its military relationship with China by the middle of the decade.


[1] Edward Timperlake and William Triplett, Red Dragon Rising (Washington, DC: Regnery Publishing, 1999), pp. 73 and 108
[2] Gulf Daily News (Dubai), September 1, 2008
[3] Newsweek, July 4, 1988
[4] Bill Gertz, The China Threat (Washington DC: Regnery Publishing, 2000), p. 104
[5] Khaleej Times (Dubai), September 1, 2008
[6] Gulf Daily News (Bahrain), August 24, 2008
[7] Ibid
[8] Khaleej Times (Dubai), September 1, 2008
[9] New York Times, February 2, 2009
[10] Edward Timperlake and William Triplett, op. cit., pp. 98-99
[11] Agence France Presse, Washington, June 25, 2009
[12] Ibid.
[13] Daniel Wagner, “Ahmadinejad’s Victory: Implications for the United States and Israel.” A report
published by the Institute for Near East and Gulf Military Analysis (INEGMA, Dubai), June 15, 2009
[14] Ibid
[15] Xinhua News Agency, Beijing, September 6, 2008
[16] Ibid
[17] See Xin Ma, “China’s Energy Strategy in the Middle East,” Middle East Economic Survey, vol. LI, No. 23, June 9, 2008
[18] FNA, Tehran, July 28, 2008
[19] Ibid
[20] Information obtained in an interview with an official of Iran’s Chamber of Commerce during the author’s visit to Tehran, September 2008
[21] IRNA News Agency, April 22, 2002
[22] Chris Zamvelis, “The Geopolitics of Sino-Syrian Relations,” China Brief, Vol. WIII, Issue 20, October 23, 2008, pg. 9 Ibid
[23] Ibid
[24] Xinhua News Agency, March 30, 2008
[25] China Daily (Beijing), July 11, 2007
[26] Xinhua News Agency, September 28, 2008 China is also an early mover in Iraq, and CNOOC will probably be one of the first energy companies to secure a major contract to develop Iraq’s rich untapped oil reserves
[27] China is also an early mover in Iraq, and CNOOC will probably be one of the first energy companies to secure a major contract to develop Iraq’s rich untapped oil reserves
[28] The Jerusalem Post, October 25th, 2007
[29] Chris Zambelis, Loc. cit., p 11