China's Iran Dilemma: Principle, Power and Petroleum

In recent years, there have been headlines of whether China will surpass the US as the next global superpower in the upcoming decades. Hence, the Iran war should be a great opportunity for China to show their authority and might, so why is it that there have been few major headlines on Chinese actions ever since the war started? China has adopted an assertive diplomatic stance, revealing something more important: not the absence of Chinese power, but the limits of the kind of power Beijing wants to exercise. 

From the beginning, Beijing had condemned the early US-Israeli attacks, opposed regime change, calling for an immediate ceasefire as they rejected the abuse of power. By early April, the Chinese foreign ministry said Wang Yi (the Foreign Minister of the People’s Republic of China) had made 26 calls with counterparts from relevant countries. Behind the scenes, Beijing worked with Pakistan on a five-point initiative calling for ceasefire, peace talks and protection of civilians and shipping lanes. China has spoken intensively with Iran, Saudi Arabia, the UAE, and other countries, presenting itself behind the scenes and not as a formal mediator. Though their role in de-escalating the conflict is undeniable, they are doing so with diplomacy without coercion. China has not sent ships to enforce maritime security, has not offered a security guarantee and has not used its oil leverage in any public confrontational way that would force a deal out of Iran. 

Hence, there is a clear gap between diplomatic activity and hard enforcement, a clear component of this situation. We must not forget that China is not just a pure neutral referee floating above this conflict. China is Iran’s main economic lifeline as China has bought more than 80% of Iran’s shipped oil last year and the USA’s latest sanctions on Hengli Petrochemical underline how central Chinese refiners remain to Iran’s economic survival. China and Iran signed a 25-year cooperation agreement in 2021 which aimed to be a strategic partnership designed to deepen economic, political and security ties while drawing in potential investments up to $400 billion from China into Iran in exchange for a steady supply of discounted oil. However, another main aim after its implementation in January 2022 was to bypass US sanctions. This shows how when China speaks of sovereignty and peace, whilst that is to the majority’s interest, that does not cover the entire story as they have real material interest at stake, one of which being keeping the Iranian oil relationship alive without getting trapped in its military consequences, showing how they aren’t acting completely from a position of clean detachment.

China is quiet in the headline as its preferred tools are quiet by design as they act via phone calls, shuttle diplomacy, statements of principle and selective pressure. In addition, while Beijing’s approach in this conflict is shaped by energy, another important aspect to consider is the desire to preserve a manageable relationship with Donald Trump ahead of a mid-May summit. China has to balance their role in this conflict as they cannot alienate Tehran but they also do not want to rupture ties with Gulf Monarchies or further destabilise its wider relationship with the US. China has to balance Iran, Saudi Arabia, the UAE, global shipping and US-China politics at once so they are clearly not passive. They are hedging in a disciplined manner. 

However, by hedging, China is not exercising leadership. This war has been significant in exposing the limits of Chinese power in the Middle East. China can reap the benefits of buying oil, whilst also providing political cover whilst helping nudge parties toward talks, which has been previously shown during the successful 2023 Saudi-Iran rapprochement which was brokered in Beijing. However, wartime order is much harder than peacetime rapprochement. This is why a French navy chief starkly pointed out that China had not stepped in to reopen the Strait of Hormuz and would have to engage more directly if normal traffic were to be restored. In the midst of all this, they are enjoying a privileged ‘special pass’ and more consistent access than many Western nations due to its diplomatic ties with Iran. This shows how Beijing wants the prestige of a peacemaker but it does not want the burden of a guarantor. 

This is China’s dilemma. China wants principle, but principle is easier to defend when petroleum benefits are not hindered. China wants power but a form of power based on leverage. China wants to look like an adult in the room, but without the burden of security being placed on them, unlike the US and its allies. This war does not prove that China is irrelevant, or that they are secretly controlling events from behind the scenes. It shows how China is influential, commercially central, diplomatically active and still unwilling to pay the full price of order. Hence, the quiet around Beijing is not a mystery; it is a strategy.