Wealthy Saudi Arabia provides China the opportunity to invest in its numerous infrastructure projects to meet the needs of the future, while more economically-troubled Iran provides a base for Chinese companies to build factories.
The People’s Republic of China (PRC) has a strong relationship with both Iran and Saudi Arabia but balancing these relationships might prove to be increasingly complicated as China needs Iran and Saudi Arabia for the vast oil reserves each country has. China is oil-poor and the energy needs of the PRC have grown with the expansion of its economy.
Despite its plans to introduce more energy efficient infrastructure and transportation, China is still beholden to fossil fuels.
The two powers of the Persian Gulf also contribute to Beijing’s economic ambitions: wealthy Saudi Arabia provides China the opportunity to invest in its numerous infrastructure projects to meet the needs of the future, while more economically-troubled Iran provides a base for Chinese companies to build factories.
Now China must balance its relationship between the two countries.
China and Iran
On the surface, the relationship between China and Iran is more than a marriage of convenience. Iran’s geography fits into Beijing’s strategic ambitions, its oil can help supply China’s economic rise and its antagonism toward the United States gives China a potential ally against Pax Americana.
This realization is likely the origin behind a secretive economic and military deal, details of which were leaked in August. Most of the deal remains a mystery, but it is reported to be a 25-year agreement that involves Beijing spending billions in Iran in return for discounted oil and access to some of Iran’s ports and military bases.
While Beijing may want a partnership with Tehran, Tehran needs a partnership with Beijing as the Iranian economy is desperate for Chinese capital. The Islamic Republic also faces the specter of a military confrontation with the US, Saudi Arabia, or Israel and having a Chinese military presence might serve as a deterrent.
For China, one of Beijing’s strategic nightmares is a naval blockade of the South China Sea that could starve the PRC of its energy supply. Iran might be a counter to that, as the Islamic Republic borders Central Asia, which is at the heart of the land belt of the Belt and Road Initiative (BRI). It is through this that China might gain a lifeline in case their nightmare becomes a reality.
Iran’s geography also fits into China’s “String of Pearls” strategy, which creates multiple ports along the maritime road of the BRI. One strategic port is positioned near the Strait of Hormuz, the only way in and out of the Persian Gulf and one of the most strategic locations in the world.
But Beijing’s strategic ambitions are not only limited to the sea. If leaks of the Iran-China deal are accurate, Chinese military will be stationed in Iran and its air force will be granted access to selected Iranian air bases. This has the likelihood of serving as a powerful deterrent against potential attacks against Iran, most notably from the US.
This could be Iran’s most strategic utility to Beijing. Chinese investment in Iran will give Beijing more influence over the Islamic Republic, most notably over its foreign policy. While Iran may be desperate for an ally to alleviate the economic damage inflicted by years of sanctions, China may need a country willing to do its bidding against the US.
China and Saudi Arabia
For decades, Saudi Arabia has focused almost solely on oil production. While other industries have developed within the Kingdom, most notably construction, Saudi Arabia has neglected developing other areas of its economy. But the Kingdom’s massive oil supply is still limited and its depletion is expected to arrive within a few decades.
Other Gulf states have taken this into account. Qatar has built one of the most intricate international finance webs in the world and the United Arab Emirates is a global center for commerce. Saudi Arabia has so far ignored warning signs and the authoritarian nature of the Kingdom’s government deters investment in areas other than oil.
This realization led to Vision 2030, Saudi Arabia’s attempt to rapidly reorganize its economy by liberalizing some aspects of its society to invite foreign investment, in which Beijing is a willing participant.
Contrary to the attention allocated to the US-Saudi relationship, it is China, not America, that is the Kingdom’s largest trading partner. That relationship transcends economics and is increasingly strategic: Saudi Arabia is a participant in China’s growing arms trade and, most significantly, Beijing is cooperating with the Kingdom’s nascent nuclear program – a program that has peaceful designs but hostile possibilities.
Saudi Arabia has repeatedly stated that it will develop nuclear weapons if Iran shows signs of doing so. The PRC, now ostensibly a strategic partner to Iran, is complicit with this. It is doubtful that the Islamic Republic approves, though they have little room to complain.
The Kingdom has been developing a civilian program since 2011 to lessen its burden on fossil fuels and Beijing initially saw an economic opportunity in developing the program. But Chinese lawmakers would be naive to believe that the program is only peaceful and that Saudi Arabia will go to Pakistan, arguably China’s most willing partner, should they desire to obtain nuclear weapons.
The instability associated with a nuclearized Middle East stands in direct contrast to China’s interests in the region, which makes China’s cooperation in Saudi Arabia’s nuclear program even more peculiar.
The balancing act
How China will ultimately reconcile its relationship between these two antagonistic nations remains to be seen.
However, Iran and Saudi Arabia do not seem keen on forcing China to choose and both have at least one thing in common – wanting to get as much capital from Beijing as possible.
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