China Straddling a Dangerous Fence in Persian Gulf

China’s Foreign Ministry released yet another statement yesterday reiterating its opposition to sanctions against Iran, arguing that sanctions will further worsen and escalate the problem. China says it prefers “negotiations” to resolve the issue but has not, to date, played a leading diplomatic role.

A new paper from the Baker Institute Energy Forum argues that even though China and the United States have a common strategic interest in maintaining the free flow of oil from the Persian Gulf, China’s perceived overall strategic interests in the Middle East diverge widely from those of the United States. China is pursuing goals in the region that are in direct conflict with US interests, and therefore these differences need to be managed diplomatically and strategically.

China’s response to the US-led initiative on Iran highlights Beijing’s highly ambiguous goals in the Persian Gulf. Denying it has a commodity-driven policy, China has tried to straddle the fence in its Iran policy. It has offered its cooperation to US requests and Gulf Cooperation Council (GCC) diplomatic carrots by downgrading its investment activity in Iran and somewhat reducing its purchases of Iranian oil. But it continues to shield Iran diplomatically and has firmly backed Tehran’s geopolitical interests in Syria. China’s position puts it at odds with key energy exporters Qatar and Saudi Arabia, which could come back to bite Beijing just as backing the wrong side in conflicts in Libya and Sudan also hurt China’s oil interests. China’s diplomatic support for Tehran as a client state also raises the stakes of any escalation of the conflict with Iran. China appears to feel it benefits strategically if the US is bogged down in Mideast conflicts.

In light of China’s mixed response to the Iranian and Syrian situations, the US should rethink its cooperation on shale technology. The US gains substantial strategic advantages by reducing its own vulnerability to geopolitical events in the Middle East through shale development, while at the same time leaving the Chinese economy more exposed to Middle East developments than the US economy. The US therefore should seek greater cooperation from China on Iranian trade and investment before it allows US companies to transfer shale technology and know-how to China. The US should also work to lower the risks entailed in China’s current fence-sitting policies in the Middle East and elevate the level of communication between the Chinese and American militaries to prevent misunderstanding or miscalculation. The authors note that Chinese interpretations of goals of “peace and stability” in the Middle East differ from those of America and therefore must be managed carefully.