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Why China Backed the Iran Sanctions

Tags: United Nations , United States , Iran , China , Energy

Sekiyama, Takashi ( –2017.3)

December 06, 2010

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On June 9, 2010, the United Nations Security Council adopted a resolution imposing a new round of sanctions on Iran for continuing its uranium enrichment program despite criticism from the international community. The US-led sanctions effort gained majority backing and managed to pass the Security Council after China and Russia, which had initially been in the opposition camp, finally threw their support behind the resolution. How can we account for the two countries’ decision to abandon their opposition to new sanctions? Focusing on China, this article will examine the motives underlying that decision.

China’s Omnidirectional Foreign Policy

China has identified three basic national tasks: achieving modernization, reunifying the nation, and maintaining world peace while promoting common development. Of these, the top priority is modernization, as suggested in the preamble to the Constitution of the People’s Republic of China, which states that “the basic task of the nation in the years to come is to concentrate its effort on socialist modernization.” This emphasis is predicated on the idea that only through modernization—which is essentially the pursuit of economic development—can the state build up the strength needed to achieve unification, world peace, and common development.

To ensure that its foreign and national security policies contribute to the top priority of modernization, China has made it the goal of those policies to create a “harmonious world” (defined as a global environment in which countries enjoy joint prosperity under conditions of peace) conducive to its own economic development. In more concrete terms, China identifies the key principle of its foreign policy as the pursuit of friendly and cooperative relations with every country, based on the Five Principles of Coexistence (mutual respect for territorial integrity and sovereignty, mutual nonaggression, mutual noninterference in each other’s internal affairs, equality and mutual benefit, and peaceful coexistence).

But talking about an omnidirectional foreign policy that develops friendly and cooperative relations with every country is far easier than actually achieving it. The principle that it is impossible to please everyone applies to the world of diplomacy just as it does to personal interaction. For a country that keeps a certain distance from the international community, as China did until the 1990s, it may be possible to pursue a broad but superficial “omnidirectional foreign policy” without worrying about criticism or pressure from other countries. But now that China is enmeshed in relationships of mutual dependence within the international community, it finds itself in a situation where it has to balance a wide array of diplomatic ties—with the Western industrial nations that provide the markets for its goods, with the countries along its borders, and with the developing nations that supply resources.

This concept of a balanced foreign policy that can please everyone is essential to an understanding of Chinese diplomacy today. China holds the view that it must achieve this sort of all-round balance because the pursuit of economic development leaves no room for creating enemies.

Close Ties to Iran

True to its policy of omnidirectional diplomacy, China has been rapidly strengthening its ties with Iran in recent years. In 2006, China became Iran’s largest trading partner, taking over that position from Japan. China has also been actively investing in Iran. In 2007, the China Petroleum and Chemical Corporation (Sinopec) finalized a $2 billion contract to develop Iran’s Yadavaran oilfield. In this sense China presents a stark contrast with Japan, which sharply reduced its own investment share in Iran’s Azadegan oilfield in 2006 in deference to Washington’s push to tighten sanctions on Iran.

China’s deepening ties with Iran are of course aimed at securing oil resources. Rapid economic development is powering a dramatic rise in energy demand in China, and Iran, with its rich reserves of oil and natural gas, has become a key supplier. While Japan, Europe, and the United States have been pulling out of Iran, China, with its omnidirectional foreign policy, has stepped in to fill the void and secure its own energy supplies. In fact, as a source of Chinese oil imports, Iran now ranks second only to Saudi Arabia.

From Iran’s perspective, China has become an important partner as well, as the Iranians attempt to cope with economic sanctions imposed by Europe and the United States. Iran has been able to import an array of Chinese goods, including materials for nuclear reactors, electric equipment, and automobiles, while at the same time accumulating a large trade surplus through lucrative oil exports to China. In 2009, that trade surplus was $5.4 billion, and it was $11.6 the previous year (according to statistics released by China’s Ministry of Commerce).

 

Overview of China’s Trade with Iran (2009)

(Unit: $100 million)

Exports

 

Imports

 

Total

79.2

Total

132.9

Nuclear reactor related

18.2

Mineral fuels

105.7

Electric equipment

11.2

Precious metals

8.2

Vehicles

9.5

Organic chemicals

8.2

Vehicle parts

7.1

Plastics

6.3

Steel products

5.6

Copper

1.6

Source: Statistics released by China Customs.

China and Iran share a long history of interaction because of their links via the Silk Road. Iranian President Mahmoud Ahmadinejad emphasized these friendly ties in a message to China at the Chinese New Year, noting that both countries are “ancient civilizations with similar cultures” and expressing his “special wishes of friendship to the people of China and its government.” He also called for the two countries to unite against their common enemy, the United States, saying, “China and Iran face a common threat. Some powerful nations do not wish to see China become a great power with a worldwide influence. We are firmly opposed to that stance and will do our utmost to support China. This is because we have a shared vision, beliefs, and interests, as well as a shared enemy” (Phoenix New Media, February 17, 2010).

Mindful of this close relationship, China has emphasized the need for a peaceful settlement of the Iranian nuclear issue. As late as May 27, the Chinese Foreign Ministry issued a statement calling for the “process of dialogue and negotiations to be maintained and promoted through diplomatic effort so that a comprehensive and lasting solution that satisfies all parties involved can be reached.”

Yet two weeks later, China voted to support a new round of UN sanctions on Iran. How can we account for this change in Beijing’s position?

China Cannot Ignore the US

The situation China faces illustrates the difficulties inherent in the “balanced diplomacy” that Beijing has embraced as the guiding principle of its foreign policy. However important its relations with Iran, China could not simply continue to insist on a diplomatic resolution, ignoring American pressure for sanctions on Iran.

The importance of the United States to China today goes without saying. In monetary terms, the United States is China’s largest trading partner, with bilateral trade volume reaching $333.7 billion in 2008. Iran is important to China, too, but trade between the two countries the same year totaled only $27.8 billion, a fraction of China’s trade with the United States.

 

China’s Major Trading Partners (2008)

Unit: $1 billion

1

United States

333.7

2

Japan

266.7

3

Hong Kong

203.6

4

South Korea

186.1

5

Taiwan

129.2

6

Germany

115.0

7

Australia

59.7

8

Russia

56.9

9

Malaysia

53.6

10

Singapore

52.5

23

Iran

27.8

Source: National Bureau of Statistics of China, China Statistical Yearbook 2009.

Creating an international environment favorable to China’s own national goals means maintaining good relations with the United States, and not only in the realm of trade. The United States holds the key to the Taiwan problem, the focus of Beijing’s goal of “reunifying the nation.” The United States also controls China’s sea lanes—from the Asia-Pacific to the Indian Ocean and the Middle East. There are also quite a few issues that China would like the United States to steer clear of, such as the Dalai Lama, human rights, and the value of the Chinese currency. If the United States raises such sensitive issues, it places the Chinese government in a bind, caught between US demands and an increasingly nationalistic mood at home.

Unfortunately, relations between the two countries grew strained around the beginning of 2010. Beijing was displeased by a succession of statements and actions by the administration of US President Barack Obama, including its criticism of government constraints on freedom of expression (in connection with Google’s Chinese operations), the approval of US weapons sales to Taiwan, a meeting with the Dalai Lama, and calls for China to float its undervalued currency.

Why China Changed its Stance

Based on the background information above, the following three reasons can be adduced to explain why China switched course and decided to support the new UN sanctions against Iran.

(1) Concern over Relations with the United States

Naturally, the top reason for China’s about-face on the UN Security Council sanctions resolution was concern over its relationship with Washington, the driving force behind the effort to impose additional sanctions on Iran. Relations had been rocky since the start of 2010, but Beijing had managed to patch things up with President Hu Jintao’s attendance at the April 13 Nuclear Security Summit at President Obama’s invitation. Beijing was probably anxious to avoid another falling out over the sanctions issue.

To push through new sanctions against Iran, the United States needed the cooperation of China, which has veto power as a permanent member of the Security Council. China must have thought it advisable to lend its support to the American effort instead of digging in its heels over Iran, especially in view of other smoldering disputes, such as American demands that China float the undervalued yuan.

(2) Watered-down Sanctions

That said, no matter how important its relations with the United States, China cannot simply abandon Iran if it means to continue pursuing an omnidirectional foreign policy. A second reason China decided to support the proposed UN Security Council resolution was that it had managed to water down the sanctions to reduce their actual impact on Iran.

The sanctions were intended to strike a blow at the activities of organizations, companies, and individuals involved in the development of nuclear weapons and ballistic missiles. For this purpose the resolution calls for a freeze on the assets of such entities, specifying 15 groups connected to Iran’s Islamic Revolutionary Guard Corps, three companies affiliated with the Islamic Republic of Iran Shipping Lines, and one individual, the head of the Esfahan Nuclear Technology Center.

Conspicuously absent from the list, however, is the Export Development Bank of Iran, which plays an integral role in Iran’s trade with China; it was apparently removed from the original list of sanction targets (see the June 9 online edition of the Yomiuri Shimbun). The United States had also hoped to deliver Iran an economic blow through an embargo on refined petroleum products and natural gas, but in the end the critical energy sector was exempted from trade sanctions.

It would appear, then, that China was induced to change its position on the sanctions because the sanctions themselves were watered down in this way.

(3) No Weakening of Iran-China Relations (China actually benefits)

The third factor that accounts for Beijing’s decision is the fact that in the final analysis, China’s support for the sanctions resolution will have no significant impact on its ties with Iran.

Iran seems to appreciate China’s need to balance the concerns of the international community with its own. In fact, Tehran is most likely grateful that China and Russia did all they could in the midst of this balancing act to eviscerate the tough sanctions sought by the United States.

Although China came round to supporting the UN Security Council’s sanctions resolution, this does not mean that Beijing has fundamentally altered its policies towards Iran. A spokesperson for the Chinese Foreign Ministry made this clear on June 10, the day after the sanctions were adopted: “China has maintained close and sound communication with all parties, Iran included, in handling the Iranian nuclear issue over the years. We will continue to do so in the future. I would like to emphasize that China values its relations with Iran” (Chinese Ministry of Foreign Affairs website; June 11, 2010).

The tightening of sanctions against Iran by Europe and the United States is by no means problematic as far as China is concerned, since it increases Iran’s dependence on China. Under the watered-down sanctions, Chinese economic interests in Iran, centered on the oil sector, are bound to expand as Japan, Europe, and the United States pull out.

Conclusion

China is not the only country that needs to strike a delicate balance in its foreign policy. Japan’s position also requires it to steer a narrow diplomatic course between Iran and the United States. Iran has long been a key supplier of oil to Japan, and Japan was Iran’s largest trading partner until 2005. But Japan’s support for the US-led effort to strengthen economic sanctions has weakened its ties with Iran. In this respect, Japan’s situation contrasts sharply with that of China, which has managed to kill two birds with one stone in doing the United States a favor even while expanding its own relationship with Iran. Japan, too, should be able to strike such a balance by forging a foreign policy that accommodates the United States without following it blindly. (Translated from a report in Japanese published on July 12, 2010)

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