Research
- +10
Jarrett Blanc, Thomas de Waal, Karim Sadjadpour, …
{
"authors": [
"Jarrett Blanc"
],
"type": "legacyinthemedia",
"centerAffiliationAll": "dc",
"centers": [
"Carnegie Endowment for International Peace"
],
"collections": [
"Iranian Proliferation"
],
"englishNewsletterAll": "americanStatecraft",
"nonEnglishNewsletterAll": "",
"primaryCenter": "Carnegie Endowment for International Peace",
"programAffiliation": "ASP",
"programs": [
"American Statecraft"
],
"projects": [],
"regions": [
"North America",
"United States",
"Middle East",
"Iran",
"East Asia",
"China"
],
"topics": [
"Economy",
"Trade",
"Security",
"Foreign Policy",
"Nuclear Policy"
]
}
Source: Getty
In The Media
With U.S. Sanctions Looming, China Loosens Trade Ties With Iran
Early next month, the U.S. will re-impose sanctions on Iran that had been lifted under the Iran nuclear deal. China’s largest oil refiners may also stop importing Iranian oil in November, which will effect Iran’s economy.
Published on Oct 29, 2018
Source: Axios
On Nov. 4, the U.S. will re-impose sanctions on Iran that had been lifted under the Iran nuclear deal. In response, the Bank of Kunlun, which handles China’s financial transactions with Iran, informed customers that on Nov. 1 it will stop processing them. China’s largest oil refiners, Sinopec and China National Petroleum Corporation (CNPC), may also stop importing Iranian oil in November.
Why it matters: China is Iran’s largest oil importer and most important trading partner. Because China is better insulated from U.S. sanctions than other major importers, Iran could avoid the worst economic effects of U.S. sanctions if China continues buying its oil. But if China cuts back, Iran will likely pull out of the nuclear deal, leaving it free to resume an unrestricted nuclear program.
The background: Nevertheless, Chinese government officials have been deeply critical of President Trump’s nuclear deal withdrawal. At the UN Security Council's September meeting, Foreign Minister Wang stressed economic sovereignty and defended “the legitimate right of all countries to normal economic relations and trade with Iran.”
There are three ways to think about China’s latest moves:
- A bargaining strategy. China is seeking discounts and other favorable commercial terms for continued trade with Iran, so leaking that its oil refiners are rethinking their positions gives China leverage. Since Trump is sensitive to oil prices, China may also be trying to soften the U.S. position by surprising the market and pushing prices up.
- A way to restructure trade with Iran. China may simply be further insulating its biggest firms from Iran-related sanctions by removing them from this trading relationship, leaving smaller Chinese refiners and banks to step into the gaps left by Kunlun, Sinopac and CNPC. This would put some effective limits on Iranian oil sales and other trade without totally shutting it down.
- A diplomatic concession. If China is preparing to comply with re-imposed U.S. sanctions, it might be as a sweetener to secure a Trump–Xi meeting at the November G20 to make progress on the trade war, which is vastly more important to both countries than Iran sanctions.
The bottom line: In any case, the Trump administration has succeeded in creating the impression that China bowed to U.S. pressure, something China was careful to avoid when it substantially reduced Iranian oil purchases under President Obama. By acting before Trump’s November deadline and leaking waiver requests, China has made, in principle, an important concession.
About the Author
Jarrett Blanc
Former Senior Fellow, Geoeconomics and Strategy Program
Jarrett Blanc was a senior fellow in the Geoeconomics and Strategy Program at the Carnegie Endowment for International Peace.
- Conflict Zones in the Time of Coronavirus: War and War by Other Means
- The Best Books of 2020, as Chosen by Carnegie ScholarsCommentary
- +3
Dan Baer, Rosa Balfour, Jarrett Blanc, …
Recent Work
EconomyTradeSecurityForeign PolicyNuclear PolicyNorth AmericaUnited StatesMiddle EastIranEast AsiaChina
Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.
More Work from Carnegie Europe
- Taking the Pulse: Is Canada Leading a Third Way?Commentary
Canadian Prime Minister Mark Carney has twice inspired praise for standing up to U.S. President Donald Trump: at the 2026 World Economic Forum in Davos and on Canada-U.S. trade negotiations. Is Carney showing a third way better than the EU has in dealing with the Trump administration?
Rym Momtaz, ed.
- Europe’s Self-Confidence ProblemCommentary
The EU’s responses to two recent incidents expose the gulf between European perceptions and capabilities. Unless the union can bridge that gap, it will never become a real geostrategic power.
Rym Momtaz
- Europe’s Overseas Countries and Territories as Geopolitical AssetsArticle
European states control several Overseas Countries and Territories around the world that carry strategic, economic, and environmental weight. As great powers challenge the rules-based order, defending them is a geopolitical imperative for Europe.
Marc Pierini
- Why MAGA’s Far-Right European Ties Will EndureCommentary
In supporting Europe’s far-right, MAGA and Russia both want the same thing: a weaker EU. Europe must defend itself without abandoning the openness these forces exploit.
Armida van Rij
- Letter from the Editor: Europe Takes Two Steps Forward But One Step BackCommentary
As we close out another season of Strategic Europe, it is worth taking stock of the deep shifts underway.
Rym Momtaz
