Expanding Sino-Iranian Bilateral Ties in the Post-Nuclear Deal Era

Dr. Manochehr Dorraj's picture

Many political observers predicted that in the aftermath of the Iran nuclear deal and the subsequent lifting of a multitude of economic sanctions imposed on the country we would witness a diminishment of bilateral links between China and Iran, especially on the economic front. The logic was as follows: No longer isolated, Tehran would have access to many other suitable investment and and trade partners and the almost semi-exclusive access China enjoyed to the Iranian market as a trader and investor during the sanction regime would come to an end. Yet conventional wisdom has proven wrong and exactly the opposite has happened. One reason is that the anticipated “gold rush” of the Western investors to “one of the last remaining untapped markets in the world” has not transpired partly due a continuing US government reluctance to remove many of its sanctions that restrict the global operations of Iranian banks. Consequently, China and Iran have expanded their investment, trade, and security ties. With respect to investment, Iran has invited China to invest in two of the largest Iranian oil fields, Yadavaran and Azadegan. Regarding trade, China now imports more oil from Iran than 2015. On a related note, when Chinese President Xi Jiping visited Tehran in January 2016, describing China’s relations with Iran as a “natural partnership,” the two countries pledged to expand their current annual bilateral trade ties from $50 billion to $600 billion by 2025. As well, the two countries pledged to commit themselves to a 25-year bilateral strategic partnership. Beyond expanding investment, trade, and and other economic relations, bilateral security ties have expanded as demonstrated by joint naval exercises and cooperation against terrorism and in the cyber space security realm. In the post-sanctions period, China-Iran economic relations are doing quite well and, it might be said, even thriving!