China and the World

An oily relationship

Why Beijing resists the West’s attempts to up sanctions on Iran

See, some people do like me: all smiles for Iran’s President

No one was expecting war to break out between Iran and China. But it has this month – albeit in cyberspace.

The internet seems to be ripe with conflict at the moment, what with Beijing’s falling out with Google. And last week, a pro-Iranian government group joined the fray, hacking into Chinese search engine Baidu and unfurling an Iranian flag on its homepage.

Users trying to access the site were also startled by the text: “This site has been hacked by the Iranian Cyber Army.” According to the People’s Daily, a message in Farsi also offered a “warning” for anyone intervening in Iran’s internal affairs.

The affront led to speedy retaliation. A host of Iranian government-related websites were all pasted with Chinese flags and slogans. The Honker Union, a group of crack Chinese hackers, took credit.

The incident is a strange one because China is increasingly looking like one of Iran’s few friends among the world’s powerbroker nations. Last weekend it was the one holdout in an international meeting to discuss a fourth round of sanctions against Tehran.

Others are becoming increasingly agitated by Iran’s nuclear ambitions but China’s envoy, He Yafei, pulled out of the six-power talks, blaming ‘scheduling issues’. The country’s foreign minister, Yang Jiechi has made clear that China wants the Iranian issue resolved through “peaceful diplomatic negotiations”, and opposes more sanctions.

According to the New York Times, Chinese leaders see Iran less as a threat and more as potential ally. It terms China “one of Iran’s more reliable defenders” and reckons Beijing has a vested interest in coddling its relations with the Islamic republic. That’s because its economic links to Tehran are growing rapidly.

With much fanfare China National Petroleum (CNPC) signed a $5 billion deal last June to develop the South Pars natural gas field in Iran. Then in July, Chinese companies were invited by the Iranians to participate in the construction of seven oil refineries and a 1,500km oil pipeline – at a cost of $42. 8 billion.

China has also been the biggest single buyer of Iranian oil for the past five years. With that number only set to grow – it constitutes around 12% of China’s total oil imports already – it is not hard to see why Beijing is keen not to upset Tehran.

And for China the economic relationship is about more than just energy. Sino-Iranian trade hit an estimated $30 billion in 2009. Chinese construction firms have won big contracts to build highways and tunnels (see photo), including a reported $450 million hydroelectric project on one of the world’s largest dams, which is due for completion in 2013. Also reported is a $600 million contract to provide trains for Tehran’s metro, as well as an automotive joint venture between Chery Auto and Iranian car firm Khodro.

In all 228 Sino-Iranian deals are supposed to have been inked, according to Chinese government estimates. More will likely follow. At the end of last year the Chinese vice-minister of commerce Chen Jian led a delegation of 80 firms to Tehran for a Sino-Iranian Trade Fair. So, with so much at stake, even a small spat in cyberspace will likely be swept under the Persian rug.


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