Why China’s support for Iran has limits

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BEIJING - 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 when US and Israeli strikes began to pummel Iran, Beijing showed little support for Tehran’s defence besides criticising the attacks. 

The reasons go beyond military restraint. The relationship between China and Iran is 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. 

Chinese President Xi Jinping made a rare, direct comment about the war on April 20, calling for a reopening of the Strait of Hormuz that carries most of the Iranian oil destined for China.

But with a crucial summit with US President Donald Trump weeks away, Mr Xi still has every incentive to avoid becoming an active player in the conflict. 

How important is Iran to China diplomatically?

China’s relationship with Iran appears grounded in pragmatism rather than deep strategic alignment. Iran is a member of China-led groupings such as BRICS and the Shanghai Cooperation Organisation that support Beijing’s effort to dilute US influence and bolster its credentials as a champion of the Global South.

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

However, its support for Iran has limits. 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.

China enhanced its diplomatic credibility in the Middle East in 2023, when it helped to facilitate a rapprochement between Iran and Saudi Arabia – though some Western diplomats questioned whether it played a decisive role. 

Dr She Gangzheng, a professor of 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 Russia is on a different level from its ties with Iran. 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 Mr Xi and Russian President Vladimir Putin reinforce that bond. 

What is China’s economic relationship with Iran?

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. Imports from Iran help Beijing to diversify its energy supply from countries such as Russia and Saudi Arabia, but they are ultimately replaceable. 

Iran is formally part of China’s Belt and Road Initiative aimed at boosting trade links with nations across Asia, Europe and Africa.

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

Despite headline deals suggesting otherwise, Chinese investment in Iran has remained modest. In 2021, Chinese Foreign Minister Wang Yi signed a 25-year strategic cooperation agreement during a visit to Tehran that envisioned as much as US$400 billion (S$511 billion) in Chinese investment, according to The New York Times.

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 former 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 show that 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. 

Mr Esfandyar Batmanghelidj, chief executive of London-based think-tank Bourse & Bazaar Foundation, said: “Major Chinese firms have steered clear of Iran due to secondary sanctions risks.” 

What about military ties?

China officially stopped selling weapons to Iran in 2005, when the International Atomic Energy Agency declared that Tehran was not complying with the Non-Proliferation Treaty, prompting the UN 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. Neither China nor Iran has publicly confirmed them.

After the US and Israel began their assault on Iran, 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 past 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. 

Mr Trump made cryptic comments on April 21 suggesting that China possibly provided weapons or other potentially lethal war supplies to Iran, saying the US had caught a ship with a “gift” from China.

A Chinese Foreign Ministry spokesperson rejected the “false association” linking the foreign-flagged container ship with China. 

What is China’s stance on the Iran war?

China has sought to portray itself as a neutral player and a source of stability.

Its leadership has pledged to play a “constructive role” in the Middle East, and Chinese diplomats have strongly condemned the US for launching what they call an illegal war against Iran.

Foreign Minister Wang has repeatedly said that the use of force by the US and Israel lacked legal legitimacy and risked further destabilising the Middle East. The government in Beijing has also criticised Iran for targeting civilian infrastructure and escalating the conflict. 

China joined Russia in vetoing a UN Security Council resolution proposed by Bahrain that called for coordinated international measures to protect shipping in the Strait of Hormuz, arguing that the proposal was politically biased against Iran and risked legitimising the use of force under the banner of maritime security.

China’s representative at the UN said the Security Council’s role should be to de‑escalate tensions and facilitate dialogue, not to provide legal cover for expanded military operations that could “add fuel to the fire”.

In his first comments on the Middle East after the war started, Mr Xi said the world order was “crumbling into disarray”, using a Chinese phrase indicating not only chaos, but also moral decay.

The following week, the Chinese leader called for a return to “normal transit” through the Strait of Hormuz. The world’s second-largest economy relies on the Middle East for about 40 per cent of its oil imports. 

Where does China’s involvement in the Middle East 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, and has maintained productive relationships with Iran’s regional rivals. 

The war has left some Gulf nations questioning their strategic reliance on the US, offering China’s government what it sees as a chance to secure greater influence in the region.

In mid-April, amid a hiatus in US-Iran peace talks, Mr Xi hosted Abu Dhabi Crown Prince Khaled bin Mohamed, vowing to make the partnership between China and the UAE “more solid, resilient and dynamic”.

He later held his first phone call with Saudi Arabia’s Crown Prince Mohammed bin Salman in more than three years, pledging to deepen mutual strategic trust and enhance practical cooperation.

The Chinese leader called on Middle Eastern nations to “hold their future in their own hands”, language that amounted to a call for the countries to re-imagine their relationship with the US. 

While Mr Xi has not engaged directly with Iranian officials during the conflict, Mr Wang has had at least three phone calls with his counterpart in Tehran. 

For now, Beijing has shown little sign that it wants to get actively involved in peace negotiations, and is unlikely to offer security guarantees to help end the conflict without authorisation from the UN Security Council.

China’s leaders appear resolved to wait for an outcome to the war before making any move to help shape a future security settlement for the Middle East. BLOOMBERG