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 Russia Eurasia Center
- Russia Is Exporting Its Fuel Crisis to Central AsiaCommentary
When faced with fuel shortages in the past, Central Asian governments could always count on additional supplies from Moscow. That safety net no longer exists.
Galiya Ibragimova
- Russia Is Approaching a Political CrossroadsCommentary
Two divergent trends—Putin’s hardline vision of how to prosecute the war in Ukraine, and a growing desire for change in Russia—could tear the regime apart.
Tatiana Stanovaya
- What Should We Take From Andrey Melnichenko’s Essay in the Economist?Commentary
Andrey Melnichenko’s essay offers no answer to the fundamental question of how, under any kind of negotiated settlement, Europe can protect itself from the Russian ressentiment that is inevitable in all scenarios except for an outright victory for Putin.
Leonid Bershidsky
- Parliamentary Elections in Occupied Ukraine Risk Backfiring for the KremlinCommentary
Despite unhappiness on the ground, Moscow is determined to use both carrot and stick to ensure there is record support for United Russia in occupied Ukraine.
Konstantin Skorkin
- Lukashenko’s Concessions to Kyiv Reflect Russia’s WeaknessCommentary
The recent damage inflicted by Ukrainian drones and missiles on Russia has made Belarus aware of its own vulnerabilities—and surprisingly amenable to Kyiv’s demands.
Artyom Shraibman
