China In Eurasia

Beijing has inked a sweeping 25-year investment deal with Iran that could see China's economic, political, and military influence there and across the Middle East expand.

China and Iran signed the expansive deal during a ceremony in Tehran on March 27 between their respective foreign ministers, Mohammad Javad Zarif and Wang Yi. The agreement, in which Iran offered a steady supply of oil in exchange for Chinese investment under a vast economic and security accord, capped off a two-day visit that reflects Beijing's growing desire to play a defining role in the region.

"China firmly supports Iran in safeguarding its state sovereignty and national dignity," Wang said during a meeting with Iranian President Hassan Rohani before calling on the United States to drop its sanctions against Tehran and "remove its long arm of jurisdictional measures that have been aimed at China, among others."

China became a lifeline for Iran's economy and ties between Beijing and Iranian political leaders have warmed in recent years, as both have grappled with intensified diplomatic and economic confrontations with the West.

Former U.S. President Donald Trump's administration pursued a policy of "maximum pressure" on Tehran over the latter's nuclear and missile programs after withdrawing unilaterally from a 2015 nuclear agreement between Tehran and six world powers, including China. His successor, President Joe Biden, has kept those tough policies in place while also signaling a readiness to revive the so-called Joint Comprehensive Plan of Action (JCPOA).

While the Chinese deal with Iran is about furthering Beijing's regional and global ambitions as a leading power, they also undercut Washington's efforts to keep Iran isolated and better position Beijing ahead of any future nuclear negotiations regarding Iran.

"China wants to show that it is indispensable in solving some of the world's thorniest problems," Daniel Markey, a professor at Johns Hopkins University and the author of China's Western Horizon, told RFE/RL. "Beijing is looking to portray itself as an evenhanded broker, while painting the United States as the more problematic global player."

Decades And Hundreds Of Billions

Neither the Iranian nor the Chinese government gave specifics about the agreement during the signing, but a leaked draft obtained by Western newspapers in July pointed to large investments in Iranian infrastructure.

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According to The New York Times, the draft covered $400 billion worth of Chinese investments in exchange for a steady supply of discounted oil to fuel China's economy, although a draft seen by RFE/RL does not specify the amount of the deal.* Those investments would focus on energy and high-tech sectors as well as plans for other fields such as telecommunications, ports, railways, and health care, while also promoting Iran's role in Chinese leader Xi Jinping's signature foreign policy project, the Belt and Road Initiative, over the next quarter century.

The leaked draft also reportedly called for deepening military cooperation, including joint training and exercises, as well as intelligence sharing.

Iranian Supreme Leader Ayatollah Ali Khamenei has publicly backed the deal, which was said to have been proposed by Xi during a January 2016 trip to Iran.

But the deal has been met with criticism inside Iran that officials are hiding details amid fears that Tehran may be giving too much and selling off the country's resources to Beijing.

After last year's leak of the draft agreement, Iranians were skeptical and lashed out on social media, with many urging the government not to sign the deal.

In August, RFE/RL's Radio Farda quoted many ordinary Iranians saying they were worried about the long-term implications of the ambiguous deal and that it would not benefit the country.

Critics have cited previous Chinese investment projects that have left countries in Africa and Asia indebted and ultimately beholden to Beijing and Chinese firms.

Beyond internal pushback, it is also not immediately clear how much of the agreement can be implemented with U.S. financial sanctions reimposed after the JCPOA withdrawal limiting how much business Chinese entities can conduct in Iran.

"The agreement's success will depend on either de-escalation of tensions between Iran and the [United States] or further escalation of competition between China and the [United States]," Ali Vaez, the International Crisis Group's Iran project director, told RFE/RL.

Delivering On The Deal

It also remains to be seen how many of the ambitious projects detailed in the agreement will come to fruition.

Should the nuclear agreement remain stalled or worse, Chinese firms could face secondary sanctions from Washington. Beijing also has a mixed track record in Iran when it comes to executing large projects.

China National Petroleum Corporation (CNPC), the state-owned oil and gas company, signed a contract to develop Iran's South Azadegan oil field in 2009 after a Japanese firm pulled out. But Tehran ultimately ended the arrangement due to alleged underperformance and delays.

CNPC also inked multibillion-dollar contracts to develop a gas field, but the effort was abandoned after numerous delays.

"Signing an agreement is one thing; its materialization is quite another," said Vaez. "China's track record indicates that it often overpromises but underdelivers to Iran."

'A Friend for Hard Times'

Despite lingering concerns over the controversial deal signed with China, Beijing has offered Tehran a vital economic and political lifeline.

While Xi first proposed the strategic investment deal back in 2016, negotiations moved slowly.

Tehran signing the JCPOA nearly six years ago and reaching a deal with Washington to ease sanctions on its economy opened the door for European companies, who courted Iran with investments and plans to develop oil and gas fields.

But the Trump administration's withdrawal from the deal and ensuing sanctions forced European companies to leave, leading Tehran to look east to China once again.

After signing the deal with Wang, Zarif said that "China is a friend for hard times," referring to the economic and diplomatic support that Beijing has provided in recent years.

As the Biden administration looks to revive nuclear talks with Iran since taking over in January, Chinese support will be crucial for Tehran.

U.S. officials say that steps can be taken to bring Iran back into compliance with the terms of the agreement while the United States gradually lifts sanctions, but Tehran insists those penalties be lifted before any negotiations resume.

While calling for a return to the nuclear deal, China has so far backed Iran and demanded that the United States act first to return to the agreement by lifting sanctions that have strangled Iran's economy and its currency.

John Calabrese, an expert on China-Iran relations at The Middle East Institute, a Washington-based think tank, said he thinks Beijing is looking to preserve the JCPOA and prevent Iran from developing a nuclear weapons program. He warned that such a program could lead to further regional instability and jeopardize Beijing's diplomatic inroads in the Middle East, where "Chinese stakes in energy and other economic sectors have grown significantly."

Regional Ambitions

China continues to play a growing role in the Middle East.

Prior to his visit to Iran, Wang visited Saudi Arabia, Tehran's main rival, and was warmly received in Riyadh. The Chinese foreign minister also visited Turkey and the United Arab Emirates, with additional stops in Bahrain and Oman.

Beijing has long avoided taking sides in conflicts in the Middle East, and Wang has offered China's diplomatic capital to be a "peace broker" in the region. At a press conference at the annual National People's Congress on March 8, Wang talked up Beijing's deepening ties with the Arab world and said a host of agreements heralded "a new chapter" of Sino-Arab relations.

Calabrese, who is also an assistant professor at American University, said that given China's diverse ties in the region and ambitions for the Middle East, it will be treading cautiously following this month's deal not to alarm Saudi Arabia and the United Arab Emirates, Iran's regional rivals.

Moving forward, he said, Beijing is positioning itself to play a more central role in reviving the Iran nuclear agreement and de-escalating tensions between powers in the Middle East, which could be a major diplomatic win for China.

"If that is the case and [it] bears fruit, then Beijing comes out stronger and [looks] stronger all around," Calabrese said.

*CLARIFICATION: This article was amended to clarify uncertainty over the reported $400 billion figure of the investment deal. A draft of the agreement seen by RFE/RL does not list an amount for the 25-year pact.

While China and the United States are locked in an increasingly fierce rivalry, their growing competition will reflect differently across the countries of Eurasia, where those world powers share a separate strategic approach compared to other parts of the world.

The frayed ties between Beijing and Washington were on display in Alaska on March 18-19 as top U.S. and Chinese officials met for two days of talks that produced a public spat and showed no hope on the horizon for improved relations.

The first high-level, in-person talks between the world's two largest economies since U.S. President Joe Biden took office began with sharp criticism by each side in opening remarks before the international media.

U.S. Secretary of State Antony Blinken, who was joined by national-security adviser Jake Sullivan, issued a litany of complaints against Chinese actions, including an increasingly militant posture toward Taiwan, its internment of Muslim minorities in its western Xinjiang Province, a brutal crackdown on democracy in Hong Kong, and the economic coercion of Australia.

Yang Jiechi, a Politburo member and Chinese leader Xi Jinping’s most senior envoy, who represented Beijing in Alaska along with Foreign Minister Wang Yi, said the United States had a “Cold War mentality” and was trying to “incite” countries to attack China. He also leveled sharp criticism against U.S. officials for what he called race problems.

The fiery diplomatic episode laid bare the harsh stances Beijing and Washington have developed for one another and sent a message to other countries already navigating tensions between the world powers that they should prepare for an even more challenging environment in the coming years.

For the diverse countries of Eurasia -- stretching from Eastern Europe into Central and South Asia -- that calculus could be different.

While the area is home to an expanding Chinese economic and political footprint that many analysts believe will attract more attention and pushback from Washington in the future, the bulk of the growing friction between the two countries is focused on issues closer to China’s east -- such as the South China Sea and growing tensions with Taiwan.

“Eurasia is not at the center of the U.S.-China competition,” Daniel Markey, a professor at Johns Hopkins University and a former State Department official focused on South Asia, told RFE/RL. “That doesn’t mean it won’t be an important region to watch, but the sharpest competition is playing out closer to China’s eastern shores, not its western backyard.”

Eastern Shores Vs. 'Western Backyard'

To further highlight this focus, U.S. officials met with allies in Japan and South Korea in the run-up to the meeting in Alaska to reaffirm their ties and better coordinate on China matters, which both Tokyo and Seoul view as a top security issue.

At the meeting, Beijing took up a broad agenda that showcased the Chinese leadership’s increasing confidence around the world. China’s economy has withstood a trade war with President Donald Trump's administration and has rebounded strongly from financial headwinds brought by the pandemic.

This assurance is in part due to China’s expanded presence over the last decade across Eurasia that has mostly come in the form of Beijing’s multibillion dollar Belt and Road Initiative (BRI), which has funded infrastructure projects across the broad region as a means to grow its political and economic sway.

The growing gravity through BRI-linked projects has made Eurasia into a geopolitical laboratory, with China becoming a leading development financier as state-owned Chinese banks backed costly building projects in risky markets -- expanding Beijing's influence and creating new opportunities for its companies as it invests in strategic locations like Pakistan’s Gwadar Port, rail links across Central Asia, and Iran’s vast but troubled oil sector.

“What Beijing is doing across Eurasia is significant and will be consequential if it can accomplish its goals, but that’s no easy feat,” said Markey.

While East Asia is still a region characterized by an American military presence and a constellation of U.S. allies, Eurasia is a complicated patchwork of countries that present a far less hostile policy environment for Beijing.

This is partially what motivated China’s westward expansion across the region in the form of the BRI: receptive governments eager for Chinese capital and a vast area where the United States has closed military bases and has drawn down its presence in Afghanistan.

“There has been a desire for China to avoid too much open confrontation with the West, which informs why Chinese strategies have pursued opportunities across Eurasia,” Edward Lemon, an expert on Central Asia at Texas A&M University, told RFE/RL. “China will continue to grow its role in the region, especially as the [United States] continues to pull out of Afghanistan.”

Eurasian Interests

American involvement, on the other hand, is far more disparate. While Iran is a top issue for the Biden administration, regions such as Central Asia are not a policy priority for Washington.

American interest and involvement in Central Asia have waxed and waned since the collapse of the Soviet Union, intensifying in the aftermath of the invasion of Afghanistan in 2001 and ensuing anti-terrorism military campaigns.

The region has once again received more attention as Washington increasingly views China and Russia as its two main rivals on the global stage, but Washington doesn’t look ready to compete with Beijing’s deep pockets and is unlikely to match Moscow’s commitment to engagement.

Locked Up In China: The Plight Of Xinjiang's Muslims

Radio Free Europe/Radio Liberty is partnering with its sister organization, Radio Free Asia, to highlight the plight of Muslims living in China's western province of Xinjiang.

One issue that could receive more attention amid growing tensions between Beijing and Washington is Xinjiang, where the Chinese government has reportedly imprisoned more than 1 million Uyghurs and other Muslim minorities in internment camps. The United States and other Western nations have become increasingly vocal about the camps, with the European Union agreeing on March 22 to sanction Chinese officials because of Beijing's actions in Xinjiang.

In recent years, Beijing has built up its surveillance capabilities in its western region, which shares a border with Kazakhstan, Kyrgyzstan, and Tajikistan, and begun a brutal crackdown on the Turkic Muslim minorities.

The brunt of these efforts have focused on China’s Uyghur population, but Kazakhs and Kyrgyz have also found their way into the camps, which have damaged China’s image in the wider region.

In February 2020, then-Secretary of State Mike Pompeo focused his attention on China's presence in Central Asia during a trip to the region, raising concerns about corruption, unsustainable debt, and abuses in Xinjiang. The harsh anti-China focus reportedly unsettled local governments who seek to avoid getting caught in the spats of larger powers and instead have aimed to use Washington’s more distant presence to help offset Beijing and Moscow’s substantial weight.

"Central Asia is not a battleground for the U.S.-China rivalry, but it’s not going to be easy [for it to not be involved] given that relations are so poor and competition [between the United States and China] is growing," said Nargis Kassenova, a senior fellow at Harvard who focuses on China's role in the region.

But despite the deepening rivalry between Beijing and Washington and a more difficult policy climate, neither side has much interest in changing their traditional approaches to Central Asia and beyond.

According to Kassenova, handling the growing pressures of the superpower conflict will be increasingly hard for small countries as they must also deal with Russia, which is growing closer to China as ties between Moscow and Washington reach historic lows.

Still, she says, the major external players have little interest in turning Central Asia or its neighbors into a new area of conflict with others simmering around the globe.

“There's always been an appreciation for local sensitivities, and it is likely to remain this way," she said.