Global Economy: November 2011 Archives

China is wedged in a tight spot.

The West wants Beijing to support new and tougher sanctions to stop Iran from pursuing its nuclear programme.

Even the United States, which used to refrain from putting too much pressure on China, has begun leaning on the Chinese to sever ties with the Iranians.

But Beijing needs Teheran, its third- largest crude oil supplier, to feed its voracious appetite for energy, and does not want to jeopardise this relationship.

The Chinese dilemma came in the wake of a report on Tuesday by the International Atomic Energy Agency (IAEA) that said it has credible evidence of Iran's work on an atomic bomb design.

This prompted the US to call for stricter sanctions.

Israel went a step further, supporting a pre-emptive military strike on Iran.

International pressure is growing for China, which has significant leverage as Iran's largest economic partner, to play a bigger role in resolving the issue.

For its part, China says it opposes nuclear proliferation in any Middle Eastern country.

Yet it does not favour tougher sanctions, which it says will not eradicate the problem, and will most likely oppose any military action, say analysts.

In short, China is stuck.

"Chinese diplomats are forced to weigh their every word again. The dilemma, which sees China finding it hard to follow or oppose the international community, has become common since the Cold War," state-linked newspaper Global Times said yesterday in an editorial headlined "China's dilemma over Iran goes deeper".

For now, China is calling for more diplomatic talks, rather than action, to defuse the situation.

"Sanctions will not fundamentally resolve the issue," Chinese Foreign Ministry spokesman Hong Lei told a daily news briefing yesterday.

"Dialogue and cooperation are the best way," he said, adding that the United Nations nuclear watchdog should strengthen its communications with Iran to clarify its nuclear activities.

The status quo has actually worked in Beijing's favour. It has benefited from the past four rounds of sanctions against Iran - which China did not veto in the UN - because Teheran is relying even more on business deals with Asian powerhouse.

"Iran has grown closer to China in recent years because relations with the United States and other Western powers have grown so cold," said Professor Zhang Jiadong of Fudan University.

While Beijing has said that it abides by UN resolutions by slowing down business with Iran, its investments there nevertheless hit US$510 million last year.

This may treble to US$1.5 billion next year, Sino-Iranian Chamber of Commerce chairman Asadollah Asgarowladi told a Beijing seminar yesterday.

What Beijing does not want is military action or sanctions so heavy that it would choke the already weak Iranian economy and endanger China's US$40 billion worth of trade with Iran.

Peking University Arabic studies professor Wu Bingbing noted that a key concern for China is American motives for taking more punitive action against Iran.

"Are these measures aimed at resolving the issue or forcing Iran's collapse? We have already seen from previous wars in Afghanistan and Iraq that war has not solved any issues," he said.

But if nothing is done and Iran is indeed developing a nuclear weapon and plans to use it, this could pose a huge threat to global security, and China will not stand to gain either.

After all, a rising power such as China needs, even craves, global stability to support its growth.

"China needs solid evidence that Iran is developing a nuclear weapon before it can act," said Professor Shi Yinhong from Renmin University. "Currently, the IAEA appears to have scattered but inconclusive pieces of evidence."

Until real proof - or a bigger bloc of countries supporting action against Iran - emerges, China can still chew on its dilemma.

Right now, China is not facing great pressure to take a position on how to deal with Iran, as the international community is still divided, said Prof Zhang.

"Russia is opposed to heavier sanctions; Germany and India have been silent. Most countries, including China, are adopting a wait-and-see attitude."

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