Beijing signals its confidence to pursue Chinese interests

PUBLISHED : Wednesday, 08 August, 2012, 12:00am
UPDATED : Wednesday, 15 August, 2012, 11:11pm


China dramatically increased its oil imports from Iran in June as the US and its allies were working hard to reduce such exports. China's move indicates not only Beijing's growing need for imported energy, but also its intention to demonstrate its differences with certain US policies that undermine its interests as a rising superpower.

China increased its oil imports from Iran in June by 17per cent to 2.6 million tonnes from May, according to the General Administration of Customs. This works out to about 635,000 barrels per day, compared with the daily average of 557,000 barrels for 2011.

The Chinese move came just before sanctions imposed by the European Union came into effect on July 1. The US and its allies are putting in place a tough sanctions regime to force Iran to give up its nuclear programme, by hitting it in the pocket. The ban halts all EU oil imports from Iran. Imports by the likes of India, Japan and South Korea are also expected to be significantly reduced.

And this comes at a time when the Republican candidate for the US presidential election, Mitt Romney, has hinted at supporting an Israeli attack on Iran's nuclear facilities.

Like other American trading partners, China agreed to a decrease, but not a major or total cut, of its oil imports from Iran. Although China's trade with Iran (over US$45billion in 2011) is small compared to that with the US and the EU, China is determined to maintain friendly and growing ties with Iran for strategic reasons. Given Iran's possession of the world's second-largest oil and gas reserves, they include its long-term need for Iranian oil and, in the near future, gas, as its expanding energy requirements demand even larger fuel imports.

China also has growing concerns about the impact of sanctions on Iran, which as a rising regional power is capable of affecting the pace of events in two major energy-rich regions - the Persian Gulf and Central Asia - which are, respectively, major oil and liquefied natural gas exporters and large piped gas and oil exporters to China. As China seeks to consolidate a multipolar international system, the strength of Iran, like other regional powers, is essential to the prevention of a US-led unilateral international system.

China has received a six-month exemption from America's Iran-related sanctions, in a compromise that Washington found unavoidable to secure Beijing's co-operation. In fact, Washington has granted exemptions to more than a dozen countries that 'significantly reduced' their Iranian oil imports, including India and Japan.

But India now seems to have followed China's example: it is expected to have increased its daily imports from Iran, from 264,000 barrels in June to 335,000 barrels in July. Yet, unlike China, it is uncertain whether New Delhi can withstand American pressure and continue such imports.

China's share of Iranian oil accounted for over half of Iran's total daily oil exports of slightly over a million barrels. Recent history suggests that these imports indicate a growing political schism between Beijing and Washington that is also reflected in China's ownership disputes with some Southeast Asian counties over oil-and-gas-rich islands in the South China Sea, pitting it against Washington.

As a rising superpower capitalising on its status as the world's second-largest economy, China is now confident enough to leave aside its policy of self-restraint and loudly express itself when national interests are at stake.

Dr Hooman Peimani is the head of the Energy Security Division and a principal fellow at the Energy Studies Institute, National University of Singapore

China has growing concerns about the impact of sanctions on Iran, a rising regional power