Iran sanctions open door wider for China

By Antoaneta Becker
LONDON - The European Union's new sanctions against Iran over the Middle East country's nuclear development program appear to open a new space for Chinese companies to expand their investments in a country viewed as a rogue player by much of the western world.

With China now Iran's largest trade partner, some Chinese analysts predict a wealth of new geopolitical and business opportunities with Iran. But officialdom may still hesitate at the idea of Beijing being seen as a "free-rider".

China has signed agreements with Iran worth tens of billions of dollars to allow it privileged access to Iran's oil and gas sector. Courting the partnership of Iran, which possesses the world's fourth-largest reserves of oil and second-largest of gas, has been a long and arduous process, and Beijing would loathe to jeopardize it.

In recently published memoirs, China's long-time ambassador to Tehran, Hua Liming, admitted that his diplomacy in Iran after China became an oil importer in the early 1990s had been entirely dictated by energy politics. Last year, Iran accounted for 11% of China's oil imports, ranking third among China's main oil suppliers after Angola and Saudi Arabia.

Spurred by its energy needs, China has undertaken a range of investment projects in Iran, gradually filling the void left by Western firms forced out by international sanctions. With more than 100 Chinese companies present in Iran, they have helped to build Tehran's subway, power stations, ferrous metals smelting factories and petrochemical plants.

As bilateral trade reached US$21.2 billion in 2009, China became Iran's most important trade partner. On paper the European Union still ranks as Iran's largest trading partner, but if Chinese goods imported in Iran via the United Arab Emirates are considered, China has already overtaken the EU.

This has led some to believe that Iran's defiant attitude towards the west derives somewhat from a newfound confidence that China is now supplanting Tehran's traditional trade partners. "Who can blame Iran for being so ferocious with China behind its back?" says an opinion piece on one of China's largest Internet portals, See more..

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