China's Oil Needs Affect Its Iran Ties

China’s dependence on Iranian oil could deter it from backing tougher sanctions on Iran, though Beijing supports containing nuclear proliferation as part of a broader push to raise its international diplomatic stance.

China’s trade with the U.S., at $150 billion in the first seven months of this year, dwarfs its $12 billion trade with Iran over the same period. But China is the world’s second-biggest oil consumer after the U.S., and the Persian Gulf country is one of Beijing’s biggest suppliers.
Chinese imports of Iranian crude grew to 13 million metric tons in the first half, about 15% of China’s total, and up 22% from a year earlier, according to government data.

With its growing middle class embracing cars, China already depends on imports for half of its oil needs. That ratio will have to increase to make up for the shortfall from domestic production, which can’t grow much more, leaving China eager to keep Iran’s oil flowing unchecked.

China’s reaction to the revelations that Iran has a secret nuclear plant has been muted thus far. “We hope the talks between representatives of six major powers and Iran to be held on October 1 can make positive progress,” Chinese Foreign Ministry spokesman Ma Zhaoxu said. In a statement, the ministry said it hopes “that Iran cooperates” on the issue of the uranium-enrichment plant, and reiterated its stance that nonproliferation should be achieved “peacefully through negotiations.”

Despite the diplomatic talk, there are signs that China’s leaders could be willing to take a tougher stance on nuclear proliferation as they weigh the impact of destabilizing regional arms races on their trade-dependent economy.

Although China would prefer a negotiated settlement, “we have to keep it clear, commitment to nuclear nonproliferation is China’s bottom line,” said Yin Gang, a scholar at the Institute of West Asian and African Studies of the government-affiliated Chinese Academy of Social Sciences.

With Iran flouting previous United Nations efforts, patience is running thin, he said, and Iran shouldn’t count on China’s unconditional support. “If the solution to the nuclear issue is through nonpolitical means, or a military attack cannot be avoided, I don’t think China has the power to stop such [a] military attack,” said Mr. Yin. He added that even though China and Iran are old friends “it doesn’t mean that Iran could expect that when it comes to the nuclear issues, [China’s] interests are bound together with Iran’s.”

Wall Street Journal (through Google News)