Why China is unlikely to rally behind Iran after US-Israeli strikes

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China is Iran’s most important economic partner, buying some 90 per cent of its oil exports and providing a financial lifeline to the heavily sanctioned regime.

But as US and Israeli strikes pummel Iran, Beijing has shown little support for Tehran’s defence besides criticising the attacks. 

The reasons go beyond military restraint. The relationship between China and Iran is far more lopsided and less strategic than commonly assumed.

Beijing’s investment in Iran has fallen dramatically short of headline agreements, its military ties are limited and its broader Middle East strategy depends on balancing relations with Iran’s regional rivals.

With a summit between US President Donald Trump and his Chinese counterpart Xi Jinping weeks away, China has every incentive to stand aside and position itself as a voice of stability rather than an active participant in the conflict. 

How important is Iran to China diplomatically? 

Ties with Tehran matter to Beijing, but far less than those with Russia. China’s relationship with Iran appears grounded in pragmatism rather than deep strategic alignment. 

Iran’s membership in China-led groupings such as BRICS and the Shanghai Cooperation Organization supports Beijing’s effort to dilute US influence and bolster its credentials as a leading voice of the Global South.

Beijing’s widely touted role in facilitating a 2023 Iran-Saudi rapprochement enhanced its diplomatic credibility, even as some Western diplomats questioned how central it really was.

Beijing hopes to win favour with smaller nations alarmed at Mr Trump’s readiness to intervene militarily in other countries without first seeking an international consensus. 

But China has long pursued what analysts describe as a dual-track approach in the Middle East, balancing ties with Iran against its relationships with the US and its regional allies.

Professor She Gangzheng, who teaches international relations at Tsinghua University in Beijing, said military support for Iran is “not the way that China does things in the region”.

Beijing’s relationship with Moscow is on a different level entirely. Russia is central to China’s pushback against US dominance, is a critical energy supplier and a partner across multilateral forums.

Close personal ties between Chinese leader Xi Jinping and Russia’s Vladimir Putin reinforce that bond. 

What is China’s economic relationship with Iran?

China is Iran’s dominant trade partner, but the relationship is asymmetric. China absorbs roughly a third of Iran’s trade, while the Islamic republic accounts for less than 1 per cent of commerce for the world’s second-largest economy, according to the Center for Strategic and International Studies. 

Iran’s discounted crude makes up about 13 per cent of China’s seaborne oil intake. That helps Beijing to diversify its energy supply from countries such as Russia and Saudi Arabia, but is ultimately replaceable. 

Despite headline deals suggesting otherwise, Chinese investment in Iran has been modest. In 2021, Chinese Foreign Minister Wang Yi signed a 25-year strategic cooperation agreement during a visit to Tehran that reportedly envisioned up to US$400 billion (S$510 billion) in Chinese investment.

In practice, only US$2 billion to US$3 billion has been confirmed since then, a figure that pales next to China’s commitments in the United Arab Emirates or Saudi Arabia, according to Dr Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis. 

Iranian officials have not hidden their frustration. In 2023, two years after the deal was inked, Iran’s then President Ebrahim Raisi, said before departing for Beijing that there had been a “serious regression” in the bilateral relationship and that economic ties had been unsatisfactory.

Weeks earlier, an Iranian trade official said Russia had overtaken China as Iran’s biggest foreign investor. 

China’s official data shows its foreign direct investment stock in Iran totalled US$4.5 billion by the end of 2024, compared with US$9.5 billion in the UAE.

The American Enterprise Institute’s China Global Investment Tracker, which monitors transactions of at least US$100 million since 2005, puts cumulative Chinese investment in Iran at US$4.7 billion, concentrated primarily in energy and metals.

By contrast, it places Chinese investment in Saudi Arabia at US$15.7 billion across energy, technology, metals and entertainment.

“Chinese companies have a very limited footprint in Iran relative to other countries in the region,” said chief executive of London think-tank Bourse and Bazaar Foundation Esfandyar Batmanghelidj. “Major Chinese firms have steered clear of Iran due to secondary sanctions risks.” 

Iran is formally part of China’s Belt and Road Initiative.

In 2016, China launched its first cargo train linking Yiwu in eastern China with Tehran via Kazakhstan and Turkmenistan, though the service was suspended during the Covid-19 pandemic before resuming in 2024.

What about military ties?

China officially stopped selling weapons to Iran in 2005, when the International Atomic Energy Agency declared Tehran was not complying with the Non-Proliferation Treaty, prompting the United Nations Security Council – including China – to impose a de facto embargo on nuclear-related exports to Iran. Before that, China supplied a range of missiles, aircraft and artillery, according to the Stockholm International Peace Research Institute. 

There have been reports of Chinese air defence systems reaching Iran and shipments of missile propellant ingredients, but neither China nor Iran has publicly confirmed them.

After Mr Trump’s strike, China’s Foreign Ministry dismissed a separate account that Beijing was poised to arm Iran with supersonic anti-ship missiles as “not true”.

More plausible is the supply of “dual-use” items that are designed for civilian use but can also be employed for military purposes.

These offer China a degree of deniability consistent with its broader playbook.

In the last eight years, more than 100 Chinese and Hong Kong entities have been added to a US Entity List for assisting Iran’s export control evasion efforts, according to a report by the US-China Economic and Security Review Commission. 

But the extent of Chinese support reflects a relationship that is more limited than with Russia, which China has supplied with drones and other dual-use items for the war in Ukraine. 

Where does the relationship go from here?

Beijing has limited its support for Iran to trade and diplomacy, not security guarantees of the kind offered by the US to partner nations. It has maintained productive relationships with Iran’s regional rivals, including Saudi Arabia and the UAE, and kept investment commitments modest. 

Reflecting the diplomatic tightrope China needs to walk, Mr Xi did not stop in Iran when he visited Saudi Arabia in 2022, something he did on a Middle East tour in 2016.

Several Iranian lawmakers and officials heavily criticised the trip after Mr Xi released a joint statement with the kingdom that referred to Tehran’s “destabilising regional activities” and its “support for terrorist and sectarian groups”. 

If the past is any guide, Beijing will maintain its cautious stance and engage pragmatically with whoever holds power in Tehran next. BLOOMBERG