China has said it will continue to “safeguard and fully execute” the Iran nuclear deal after President Donald Trump officially withdrew the US from the agreement on Tuesday.
Why China is going to stick to the Iran nuclear deal
Trump’s decision has caused a diplomatic earthquake among America’s European allies who want to abide by a deal seen to be a key to halting Iran’s nuclear ambitions.
But China has doubled down on its commitment to keeping the deal alive.
Officially known as the Joint Comprehensive Plan of Action, the deal was signed in 2015 by Iran and six other major world powers: the US, UK, Germany, France, Russia and China after almost two years of negotiations.
It limits Iran’s nuclear enrichment capabilities to prevent it from being able to create nuclear weapons, in exchange for the lifting of sanctions.
Why is China backing the deal?
China sees Iran as a stable strategic partner in the Middle East with whom it can align in major international issues.
The country’s supply of oil and gas is also key to China’s economic development. China is Iran’s biggest oil importer and biggest trade partner.
And given China’s massive infrastructure project, the Belt and Road Initiative, hundreds of Chinese companies – from oil and gas to telecommunications conglomerates – have been building in Iran.
In 2016, President Xi Jinping was the first foreign state leader to visit Iran after the official implementation of the Iran deal. Iranian domestic press praised China for maintaining friendly relationships with the nation and playing a “fair” role in solving the nuclear issue.
Will China comply with US sanctions?
In pulling the US out of the deal, Trump vowed to reinstate sanctions that will target Iran’s oil and shipping industries.
Experts say that China may not fall into line with US sanctions, given its own huge need for Iranian oil. Last year, China surpassed the U.S. as the world’s top oil importer.
“China will continue to engage in normal and transparent cooperation in accordance with our international duty,” said Foreign Ministry Spokesperson Geng Shuang, who also criticized the US for its unilateral sanctions and “long-arm jurisdiction”.
As the market reacted to fears that US sanctions will stall crude oil exports from Iran, oil prices shot up to a three-and-a-half year high after the official withdrawal.
“We will suffer from high oil prices, but it will be a short-term impact,” Yin Gang, a researcher at the Chinese Academy of Social Sciences, told Inkstone.
Can China afford to push on without the US?
In its brewing trade war with the US, China has already been punished for its friendliness with Iran.
Major Chinese smartphone maker ZTE paid nearly $900 million in fines for evading US sanctions by illegally selling equipment containing US components to Iran, and has just been hit with a seven-year US component ban.
ZTE announced on Wednesday that it has been forced to cease manufacturing.
The People’s Daily, a newspaper run by the Chinese Communist Party, slammed the US’ behavior as “increasingly reckless.”
Foreign Ministry spokesperson Geng Shuang echoed the sentiment. “China calls on all sides to take responsibility… and return to the track of a full-on deal,” he said. “We will keep up the negotiations and continue to stay committed to the deal.”
The remaining signatories, including China, France and Germany, are working on keeping the deal alive in the US’ absence.