With the United States having withdrawn from the Joint Comprehensive Plan of Action (JCPOA) on May 8, a new round of diplomatic efforts has begun to save the deal. To this end, Iranian Foreign Minister Mohammad Javad Zarif has recently toured China, Russia and Belgium to meet with the remaining signatories to the accord.
As Iran tries to gain assurances from China that it will remain in the deal, the US Department of Commerce has banned American firms from selling parts to ZTE, one of China’s largest IT companies, for seven years and fined the company $1.1 billion for violating sanctions against Iran and North Korea. The need to have American parts for the company’s production line has brought it to near bankruptcy. Now, US President Donald Trump is suddenly moving to reach a solution to ZTE’s fate. The parallel timing of these events highlights the complicated position Iran is faced with to win China’s support.
Beijing is Tehran’s first trade partner; in addition to being the biggest buyer of Iranian oil, it is a key political partner. In 2017, the volume of trade between the two countries was estimated at $37.18 billion, 13% higher than the year before. China is also one of the few foreign investors in Iran. Its state-owned energy giant China National Petroleum Corporation (CNPC) has a 30% stake in a multibillion-euro agreement to develop phase 11 of Iran’s South Pars, the world's largest gas field. The contract was the biggest energy deal to be reached following the signing of the JCPOA. With French consortium partner Total potentially having to pull out due to US sanctions, CNPC’s share of phase 11 could further increase. China has also signed a $10 billion financing deal to support projects in Iran, the biggest credit line secured since the nuclear deal was signed.
At the political level, Chinese President Xi Jinping was quick in traveling to Iran following the implementation of the JCPOA in January 2016. His visit led to the signing of 17 bilateral agreements and included discussions on setting up a 25-year roadmap to broaden relations and expand trade. The two countries also agreed to increase bilateral trade to $600 billion in the next 10 years.
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