Accompanied by high-level delegation talks, last week Ebrahim Raisi became the first Iranian president to pay a state visit to China in 20 years.
Commenting on China-Iran relations just before leaving for Beijing, Raisi said that economic ties between both countries had “regressed” and there was a need to “compensate” for that.
During his meeting with President Xi Jinping, Raisi said that Iran and China were “friends in difficult times”. In turn, Xi stated that Beijing would “resolutely maintain its friendship and cooperation with Iran and advance the comprehensive strategic partnership”.
Last year, China and Iran finalised a 25-year comprehensive strategic partnership agreement but there has been no fast-track activity.
Even though the implementation stage of the deal was announced in early 2021, no major contracts or projects have materialised.
Instead, president Xi proceeded on a successful tour of Saudi Arabia in December where he participated in important China-Arab summits and firmly endorsed the foreign policy of the Gulf Cooperation Council (GCC) states. With this move, Xi greatly disappointed Iran, which moved closer to Russia as a result.
An Iran-Russia alliance?
After Tehran leaned towards Moscow, there was rapid progress in defence ties and much talk about the Iranians supplying drones to be used by Russia in its war against Ukraine. As per reports, Moscow would transfer cutting-edge military technology to Tehran, including Su-35 4+generation fighter jets and S-400 defence systems.
Russia also connected the Financial Messaging System of the Bank of Russia (SPFS), similar to SWIFT, with that of Iran, while Moscow and Tehran have been discussing the introduction of a visa-free regime in 2023.
While China-Iran relations suffered a setback due to Beijing going overboard with GCC states, it also resulted in Tehran’s growing closeness with Russia.
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Meanwhile, despite the signing of the 25-year partnership with Iran, China does not have much to show for it on the ground. Since Tehran and Beijing are also strategic partners, one could have expected a defence deal with China during Raisi’s visit.
“There is zero chance that Sino-Iranian relations will evolve into a military entente. Yet, there have been rumours in Iran recently that China might be interested in buying Iranian drones,” Jacopo Scita, Policy Fellow at the Bourse and Bazaar told The New Arab.
“However, it’s not easy to envision Tehran’s unsophisticated drones giving political or operational value to the PLA [China’s military].”
Iran's 'look east' policy
Sensing that Moscow could fill the vacuum left by Beijing, China has modified its usually ambiguous stance towards Iran.
Just before Raisi arrived, Global Times reported that the implementation of the China-Iran deal would be speeded up and that the Iranian president’s visit indicated Tehran’s unswerving determination to follow its oft-discussed ‘Look East’ policy.
“The Raisi visit projects a high degree of symbolism, and that is the original intention from the Iranian side,” a European diplomat based in Islamabad told The New Arab on the condition of anonymity.
“As for the ‘Look East’ policy, it is seen as leverage vis-a-vis the West, it has not softened Western attitudes towards Tehran as expected. Therefore, Khamenei and the circle of power around him wish to convey that the choice is made.”
There were several developments in Iran’s ties with China during Raisi’s visit.
Firstly, around 20 cooperation agreements, including trade and tourism, were signed, but there was no news regarding the 25-year deal, about which not much is known.
“After the collapse of JCPOA talks, Iran does not have too many choices but to tilt further towards China,” Torek Farhadi, a financial analyst, told The New Arab.
“Former Iranian Foreign Minister Javad Zarif had touted a significant deal with China, but the terms of the deal remained secret at the time. The reality is that the terms of the deal are overwhelmingly to China's advantage and Raisi's visit is along these lines.”
Beijing is Tehran’s largest trade partner, and Iran’s exports to China stand at $12.6 billion while its imports are worth $12.7 billion. Even though Beijing invested only $162 million [less than in Afghanistan and Turkey] in Iran since Raisi came into power, China remains Iran’s largest trading partner.
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“In general geo-economic terms, China is cashing in on a lack of interest from the US in the oil and gas-rich region and walks into deals in these countries without much competition,” Farhadi observed.
“As the Russia-Ukraine conflict has concentrated most of the United States attention on Ukraine, China is increasingly doing business where the US is absent in the Middle East, just like it did in resource-rich Africa over the past two decades.”
Trade with China in yuan also helps Iran evade international sanctions imposed on it while China buys more oil from Iran through other channels, so the exact volume of oil trade is not known.
Second, the legal process of Iran’s membership in the Shanghai Cooperation Organization (SCO) was formally completed as Raisi left for China and this achievement may benefit Iran.
Keeping in mind the Russia-Iran angle, even though the SCO charter provides an equal platform for all its members, China remains in the lead as the wealthiest and most influential country on the forum.
In February, Kazem Jalali, Iran’s envoy to Moscow, said Tehran also expects to ratify a free-trade agreement with the Eurasian Economic Union (EAEU) this year. In the meantime, Iran's trade and economic relations with the European Union have declined sharply.
Even though Tehran wants to promote its Eastern dimension, the European diplomat noted that it would not be easy for “Iranian economic actors to overcome distrust towards Chinese economic activism in Iran after misunderstandings of the past in the energy sector. It is not a mystery that the Iranian economy and in particular its oil and gas sector, needs Western technology and in this regard, Iranians would by far have preferred Europe”.
However, he added that it is also true that China represents for western companies, through their subsidiaries in China, “a useful “corridor” to keep having business relations with Iran”.
Finally, there were indications of behind-the-scenes efforts regarding the revival of the Joint Comprehensive Plan of Action (JCPOA) deal as Raisi’s entourage included Iran’s top nuclear negotiator Ali Bagheri Kani.
Interestingly, Xi also pledged support for efforts aimed at reviving the JCPOA. In their joint statement, Xi and Raisi called for the lifting of international sanctions on Iran so that progress is made regarding the revival of the JCPOA.
“Despite public statements, reviving the JCPOA by playing the Chinese card is not possible after recent events. The Iranians are perfectly aware that the key to restart nuclear talks is not in Beijing,” the European diplomat told TNA.
So realistically, in the end, what did Iran gain from Raisi’s trip to China?
“The primary victory for the Raisi administration is political, with the visit fuelling the narrative that despite involvement in the Ukraine War, domestic repression, and the stalling of JCPOA talks, Iran is not isolated,” Scita said.
“But on the economic and financial sides, the impediments that have so far limited the implementation of the 25-year comprehensive agreement are still in place, and the visit will hardly reverse the course.”
Sabena Siddiqui is a foreign affairs journalist, lawyer and geopolitical analyst specialising in modern China, the Belt and Road Initiative, Middle East and South Asia.
Follow her on Twitter: @sabena_siddiqi