China's $400B Iran Bet in Jeopardy as Conflict Escalates, Report Warns

"Located at the crossroads of global commerce, the countries in the Middle East are a logistical bridge and an emerging ground for strategic investments. China has been making investments in Iran since 2005. Since the visit of Chinese President Xi Jinping to Tehran in 2016 to sign the Belt and Road Initiative, Beijing has been working to turn Iran into the cornerstone of its Middle East strategy; establishing for itself a base in the region to counter the influence of the US and setting up corridors of trade to Africa and Europe," a report in Sri Lanka's daily Daily Mirror stated.

"In 2021, Beijing signed with Tehran a comprehensive strategic partnership agreement, pledging $400 billion in long-term infrastructure in Iran and in the purchase of Iranian oil. With the outbreak of the war, the grand strategy of China lies in tatters. Chinese investments in fixed assets are at great risk; the supply of oil from Iran that China was getting at concessional terms is now uncertain. With a regime change in Iran imposed by Washington on the cards, China also stands to lose the corridors of trade through Iran it had planned," it added.

Through Iran, China has extended its presence in other nations of West Asia, which are rivals of Iran. With Iran targeting other Gulf nations amid the ongoing conflict, Chinese investments there, too, are threatened. For protecting its investments in Iran and the supply of Iranian oil, China is not in a position to urge Iran to stop carrying out attacks on other nations in West Asia, some of which host American military facilities.

China has been investing heavily in railways in Iran. Apart from railways, Chinese state-owned and private companies are also investing in key infrastructure projects like high-capacity hospitals totalling nearly 4,000 beds, metro services, automobile facilities, mining and highways. China was also cooperating with Iran on several nuclear-related projects in Iran, including the contracts for the construction of two 2,000 MW nuclear power plants, a number of 1,000 MW nuclear power plants and a heavy water reactor in the Iranian city of Arak. China had to go slow on some of these nuclear projects after the US imposed sanctions on Iran, according to the report.

Furthermore, China is expanding its Digital Silk Road and Green Silk Road Initiatives in Iran. China has also been helping Iran in building smart cities with public Wi-Fi, smart buildings, mobile payment, e-commerce and e-governance. Under the Green Silk Road, Chinese companies have been involved in renewable energy projects in Iran, like solar power, hydro-electricity and bio-fuel. Among all nations that have signed BRI agreements with China, the projects in Iran have the highest potential for overall return on investment for Beijing.

"Beijing had wanted an Iran with nuclear ambitions which could be used as a counterweight to the US. But the Midnight Hammer of last June and the ongoing Epic Fury have devastated the nuclear infrastructure of Iran and its conventional long-range missiles and drone capabilities. Iran's uranium enrichment facilities have been crippled, military backbone broken, and the stockpile of weapons shattered," the report said.

"Iran no longer can destabilise the Middle East at China's behest and keep Washington busy there. Belt and Road projects tied to Iranian ports, rail corridors and energy infrastructure now face heightened instability and security risk. A secure overland energy corridor from Iran to China, insulated from US naval power, has been reduced to uncertainty. The strategic equations have changed overnight to the detriment of China," it added.

- IANS