It Was the Best of Times for Riyadh. It Was the Worst of Times for Tehran…
And things weren’t looking that good, either, for Ali Shamkhani, former secretary of the Supreme National Security Council (SNSC), replaced days ago by Ali-Akbar Ahmadian, a decorated IRGC commander who has been recognized for his strategic initiatives in “countering the presence of the hostile U.S. naval fleet.” As noted in PersuMedia’s Daily Summary of 22 May, the change in leadership may suggest a shift towards a more hawkish approach within the SNSC. Shamkhani, it will be remembered, was the father of the China brokered Iran-Saudi rapprochement. While it is too early to conclude that Shamkhani was replaced as a result of his part in the deal, there are indications that the results to date have been skewed in favor of Riyadh.
China-Iran Trade: The Devil in the Details
In the first four months of 2023, the value of trade between Iran and China exceeded $5 billion, as reported by China’s Customs Office. At first glance, this may not appear all that significant, as it amounts to a mere four-percent increase compared to this time last year, and on track to more or less match last year’s total trade of $15.795 billion. However, a closer analysis of the figures reveals some fascinating trends. Although the overall picture is largely the same, the devil is in the details. While exports from China to Iran grew, China’s imports from Iran saw a steep decline of 39 percent, mainly attributed to the decrease in oil prices. Chinese products exported to Iran in the same period recorded a robust growth of 46 percent, reaching $3.710 billion. In other words, Iranians are buying more Chinese products, but China is both importing less and paying less for Iranian oil. This is hardly the result that the Iranians were probably hoping for when China allegedly promised an increase in economic relations following the Beijing-backed Saudi-Iran agreement.
To the U.S., Any Increase Is a Bad Increase
At the same time, the United States is sending a clear signal that China’s relations with Iran will be subjected to the highest level of scrutiny. Fresh on the heels of the Tanker Wars earlier this month, which saw the United States seize a tanker full of Iranian oil bound for China (and prompting Iran to retaliate by seizing a tanker bound for the U.S.—albeit one partially owned by a Chinese company!), the U.S. government announced a series of charges related to espionage, three of which targeted Chinese nationals. One, Xiangjiang Qiao, has been charged by federal prosecutors in Manhattan for allegedly violating U.S. sanctions by providing Iran with materials used in the production of ballistic missiles, according to a statement on Tuesday. Qiao is employed at Sinotech Dalian Carbon and Graphite Manufacturing Corporation, a Chinese company that was placed on the U.S. Treasury Department’s sanctions list in 2014 for assisting Iran in acquiring missile parts. Prosecutors claim that between 2019 and 2022, Qiao facilitated the supply of isostatic graphite, a crucial component for rocket nozzles, to Iran. He also allegedly established a bank account under a front company’s name to receive $15,000 in transfers from a U.S. bank related to these transactions. Currently residing in China, Qiao, aged 39, has not been arrested and is facing charges that include sanctions evasion, bank fraud, and money laundering. The arrest echoes the high-profile arrest of Meng Wanzhou in 2019 for charges related to evading U.S. sanctions, and will no doubt serve as a reminder to potential Chinese investors of the many hurdles thrown up by the U.S. to prevent military and economic cooperation with Tehran.
6th China-Arab States Trade Expo, Starring Saudi Arabia
While the Iranian economy is looking increasingly like a destination for Chinese goods, Saudi Arabia continues to develop a deeper, more comprehensive partnership with China, as highlighted in the recent promotion meeting for the 6th China-Arab States Expo. The event, held in Riyadh and themed “Beautiful Times, Common Vision,” showcased the growing strength of the traditional friendship between China and the Arab states, and featured Saudi Arabia as the “country of honor.” Liang Yanshun, secretary of the Party Committee of Ningxia Hui Autonomous Region and director of the Standing Committee of the National People’s Congress, emphasized in his speech at the event the growing ties between China and Saudi Arabia, and looked forward to Saudi Arabia’s participation in upcoming trade expositions in China. Liang’s involvement highlights the ways in which Chinese Muslims and the Ningxia Hui Autonomous Region play an important role in Sino-Saudi cultural relations, regardless of (or as a way to distract attention from) China’s treatment of its Muslim Uighurs. Bandar Alkhorayef, Saudi Minister of Industry and Mineral Resources, highlighted rising China-Saudi cooperation in the Saudi economy, including energy, trade, finance, and infrastructure. He highlighted China’s pivotal role as Saudi Arabia’s most important and influential economic partner.
For a Few Renminbi More
The same week, the opening ceremony of the Industrial and Commercial Bank of China (ICBC) Saudi Jeddah Branch and the renminbi (RMB) business promotion conference was held in Riyadh. During the event, ICBC showcased China’s economic and financial development, its cross-border RMB service system, and financial products in Saudi Arabia. ICBC also signed a cooperation agreement with Saudi Ajlan Group to strengthen RMB business ties. Representatives from Saudi International Power and Water Group expressed eagerness to explore further opportunities with ICBC and support the internationalization of the RMB. With branches established in several Middle Eastern countries, including Saudi Arabia, ICBC represents a further expansion of China into areas beyond the energy and export markets, marking a clear contrast with Tehran.
