Last week’s news that Iran had joined BRICS and concluded several deals with China was welcome news for supporters of the Islamic Republic’s “look East” policy. But new details have emerged that suggest that celebration may be premature. The recent avalanche of newly-signed investment deals with Saudi Arabia has dwarfed agreements with Iran, and the future of China’s appetite for foreign oil is slowly showing signs of decline. Not only that, but it appears that China may have been more interested in promoting Saudi Arabia as a new member of BRICS, and may have gone so far as to briefly oppose the entry of Iran as a counterweight. As criticism of the “look East” policy mounts among Iranian experts from across the political spectrum, it is apparent that Sino-Iranian relations are far from meeting Iran’s expectations.
Iran in BRICS: China’s Role Problematic
It is obvious that China is far more invested, literally and figuratively, in its relationship with Saudi Arabia than it is in its relationship with Iran. But what about last month’s diplomatic success, the entry of Iran into BRICS, something the New York Times portrayed as Iran sloughing off its “outcast status in the West.” Did Beijing play a pivotal role as it did in the March rapprochement between Iran and Saudi Arabia? According to Devirupa Mitra, a journalist in New Delhi, the internal debates tell a much different story. According to Mitra, China was aggressively pushing the idea of additional members, while other states, notably India, were more cautious. Once it had convinced the others to expand their ranks, the question of who would join needed to be settled. China’s original list of priority candidates included Indonesia, Saudi Arabia, Argentina, and Egypt; Iran was nowhere to be found. Once Indonesia withdrew, Saudi Arabia became the primary focus of China’s lobbying. Iran’s name was floated not by China but by other states interested in a counterbalance to Saudi Arabia. “China had been the strongest advocate for Saudi Arabia that had also been vigorously lobbying for membership, but the other members felt that there needed to be a regional balance. Moreover, Iranian President Ebrahim Ra’isi had actively engaged in personal lobbying efforts with each member state, which made it diplomatically challenging to turn him down.”
Trouble in Paradise
Surprisingly, it was China that was most opposed to this proposition, likely due to diplomatic pressure from Saudi Arabia. “According to well-informed sources, China even raised questions about the necessity of expanding the group by incorporating numerous new entrants.… At one time during the negotiations, Iran’s candidature made it almost seem like it was China versus the rest of the BRICS group, said a diplomatic source.” Saudi Arabia appeared quite irked that the UAE was set to join the group as well. Despite the diplomatic successes of the China-brokered Iran-Saudi agreement earlier in 2023, it seems that Beijing continues to give additional weight to Saudi Arabia in its diplomatic considerations. Still, it ultimately acquiesced to Iran’s entry into the organization and has continued to promote this as a positive development in terms of regional peace. But if this report is correct, it did so under pressure from other BRICS members and consistent lobbying on the part of Iran’s government, suggesting systemic problems in the Iran-China relationship.
Relations with Iran Plod Along …
The last month saw several new agreements signed or under discussion between Iran and China, including an oil barter deal worth $2.7 billion to develop the Imam Khomeini International Airport. Iran’s largest auto manufacturer, Iran Khodro, will also make up for shortfalls in domestic production by importing 6,000 electric vehicles from China’s Dongfeng Motor this month, as part of larger efforts to add around 200,000 electric motorcycles and 50,000 electric cars to Tehran’s municipal transportation system. There have also been talks of an accelerated visa agreement to facilitate Iranians acquiring visas to China in order to facilitate business and tourism. Iran has already voluntarily abolished several requirements for Chinese tourists as part of a larger effort to promote Chinese tourism in the country.
… while Relations with Saudi Arabia Race Ahead
At first blush everything looks respectable for Iran, but a glance across the Gulf to its neighbor and (until recently) main regional adversary, Saudi Arabia, the difference is obvious. In the last few weeks alone, China’s Huawei corporation opened a new major cloud data center in Saudi Arabia as part of a larger push to expand services in the region. The China National Nuclear Corp has placed a bid to build a nuclear power plant, GCL Technology Holdings is in talks to build a major solar plant, and Chinese bus manufacturer Yuton has exported a fleet of 87 buses to the Kingdom. In addition to these contracts, the Saudi-China Business Forum brokered $1.33 billion in housing investment, adding to over $10 billion in various economic agreements signed a few months ago at the 10th Arab-China Business Conference.
The Future of the Iran-China Oil Partnership
Underscoring all of this is the growing possibility that China’s demand for foreign oil imports will decline in the years to come. According to Bloomberg economic forecasts, China’s energy market is faltering due to its overall decline in growth level and a stuttering economy. Chinese sources seem to agree: Chief Executive Officer Zhou Xinhuai of Cnooc Ltd., one of China’s top oil firms, said demand growth will be curbed the rest of this year, and he raised the prospect that it may have already peaked forever. A report by the National Energy Administration also suggests that the international oil market is facing “weaker supply and demand,” and China is no exception. The report emphasizes that the production of oil by non-OPEC countries like Iran and Venezuela “further aggravated the downward pressure on international oil prices.” As China and the BRICS organization turn towards renewable energy, the future of China as the primary purchaser of Iranian oil may also come into doubt.
