The Joint Comprehensive Plan of Action (JCPOA) is the formally signed nuclear program agreement amongst Iran, the P5+1 member states, and the European Union. The agreement outlines measures Iran will take to limit its nuclear activity and infrastructure in return for the lifting of existing sanctions and economic and financial provisions. The agreement represents a significant advancement in global nuclear non-proliferation and diplomacy; it also represents a new platform for Iran to engage with the international community on not only nuclear issues but also economic and even strategic fronts. One overlooked aspect of the post-JCPOA environment is how China plays a significant role in the process and the future of the agreement. Sino-Iranian relations are poised to grow but can also be held back by potential limitations in their relationship post-lifting of sanctions. Furthermore, developments in Sino-Iranian relationships constitute security concerns, especially if they are seen as challenges to the US-led world order. Therefore, it is important to recognize what Iran must accomplish and will receive, analyze the potential benefits and costs to China, and reflect on the impact these developments have on the US.

Per the JCPOA, Iran needs to address three issue areas: existing enrichment technology, procurement, and International Atomic Energy Agency (IAEA) cooperation, amongst other issues outlined. With enrichment technology, Iran will significantly cut down on both plutonium and uranium technology and limit production at current facilities. With plutonium, the reactor core at Arak will be dismantled, spent fuel will be shipped out of Iran and new heavy-water reactor and reprocessing facility projects will be shut down. Furthermore, the current heavy water reactors in Arak will be redesigned to be in compliance with the IAEA and JCPOA conditions. With regards to uranium, centrifuge production is to be cut down by two-thirds, uranium enrichment conducted at Fordow will be shutdown, and all enrichment projects will be on hold for at least 10 years. Procurement of nuclear-related technologies is another significant area that the JCPOA seeks to address by cutting off all avenues of procurement and establishing a dedicated and monitored procurement channel to cut down on proliferation risks. In the process, transparency measures are set up to ensure a case-by-case look at Iran’s nuclear technology procurements and ensure they are for civilian and JCPOA-approved activities. Some of these measures subtly attempt to address existing illicit procurement systems, such as private Chinese proliferator Karl Lee. Finally, Iran is required to sign an Additional Protocol agreement with the IAEA, which gives the IAEA legal authority to verify a state’s safeguard obligations through inspections. In addition, a Modified Code 3.1 with the IAEA requires Iran to report new facility construction ex-ante.

In return, the international community agrees to lift sanctions placed upon Iran after IAEA verification. The majority of these sanctions are nuclear-specific with regards to technology transfers and nuclear material proliferation. Sanctions relating to ballistic missiles will still be in effect for at least 8 years as Iranian progress is still monitored. US sanctions regarding human rights abuses, missiles, and support for terrorism will still be in effect. Furthermore, there is a “snapback” clause that says if Iran violates any conditions, the sanctions removed will “snapback” into place. How might China benefit from the JCPOA?

With the passing of the JCPOA, China stands to expand its long-time relationship with Iran economically. Sino-Iranian trade in 2003 was worth around $3 billion and has since grown to $50 billion in 2014. China stands to gain significantly from being able to increase Iranian oil imports following the sanction lifts. With the lifting of sanctions, China also wants see a reduction of tensions between the West and Iran, which have negatively impacted Chinese companies with Iranian investments. Though Iran currently only stands as China’s 6th largest source of oil due sanctions, Iran’s position may chance with the potential for overland pipelines that could counter the instability and security concerns China faces in the Straits of Hormuz and Malacca. With the lifting of sanctions, Iran has an estimated $500 billion demand for domestic investment that hopefully will initially be answered with sanctions relief and unfreezing of assets. The relief from unfreezing is estimated to be anywhere between $50 to $150 billion dollars once the nuclear sanctions have been lifted. However, there is a noticeable gap between Iranian demands and potential economic relief. China could be a significant source of investment that comes to the aid of Iran. Iranian Deputy Minister of Energy Esmail Mahsouli has stated that the Chinese government has raised its investment quotas in Iran from $25 billion to $52 billion. However, there are also potential risks for China with its involvement in Iran.

China has historically aided Iran in the modernization of its military hardware. China has provided Iran the foundation for its own indigenous military-industrial sector in the form of technological and production assistance. The Nasr antiship cruise missile developed in 2011-2013 is reported to be nearly identical to the Chinese C-704 missile, indicating strong military technology cooperation. Iran has also provided maritime military assistance to China. In 2010, Chinese jets began refueling in Iran, and Chinese warships docked in the Iranian port city of Bandas Abbas in 2014. With China’s rise to a blue-water navy system, China’s military cooperation with Iran can potentially grow and provide China with extended strategic reach. However, China and Iran do not have a formalized agreement for long-term military cooperation. Iran can also exist as a piece of China’s plan to challenge the existing US-led global order. Potential participation in the “One Belt, One Road” plan could challenge US international system. Iranian ambassador to China, Ali Asghar Khaji, has been quoted saying Iran is seeking to expand its pipelines to China under the “One Belt, One Road” initiative to improve regional connectivity and security. Iran’s participation in the “One Belt, One Road” is still otherwise unclear. However, Iran also presents risks to China. Iranian liberation from sanctions may reduce its reliance upon China as a potential business partner. With sanctions lifted, western consumer-oriented companies could find a new market with the Iranian consumer. The French government has already indicated to automaker firms Puegeot and Citroen that existing sanctions on motor parts will be most likely be lifted by the end of the year. Furthermore, China takes issue, like many nations, with Iran’s support of terrorist groups such as Hezbollah and Al-Qaeda. Finally, China’s choice to expand cooperation with Iran may come at the cost of its potential relationships with Israel and countries of the Gulf Cooperation Council, due to political differences. These strained relations may negatively impact China’s ability realize its re-writing of the global order. However, what does this mean to the US?

Though the Chinese government has never formally been proven to help Iran in obtaining nuclear technology, the US is gravely concerned with the existence of private proliferators such as Karl Lee. Though not directly affiliated with the government, Karl Lee is known to have used Chinese and US front firms to export US nuclear technology to Iran. Karl Lee’s violation of international proliferation regimes deeply concerns the US, and China’s apparent lack of response and action to curb such proliferators especially troubles the US. Karl Lee is currently wanted by the FBI for violating the International Emergency Economic Powers Act. However, the issue does remain that Karl Lee is a private proliferator and technically has no ties to the Chinese government, thus limiting incentive to apprehend Lee. The US does maintain that the Chinese government has aided Iran in its nuclear developments but does not have actual proof at the moment. Some in Congress are concerned that despite the establishment of “dedicated procurement channels”, China may still stand as a proliferation risk, privately or publically. The issue of China’s challenging of the US-led international system is more long-term and holistic in nature. Iran itself does not represent the only instance of China challenging the US. But, Chinese investment in Iran does play a significant role in China’s economic and strategic expansion, often perceived at the expense of the US-led hegemony. From a realist perspective, the shifting from a uni-polar to a potentially bi-polar world could generate more conflict as nations attempt to pick sides and watch the status quo shift.

In essence, the JCPOA still stands as a positive milestone in the advancement of global non-proliferation and nuclear compliance. Though Iran still has a significant number of economic and nuclear challenges, it faces them with the support of the international community. Both China and the US must remember, no matter their course of action, to act with not only their national interests in mind but the greater global society too. For Iran, the post-JCPOA environment can be a worrying platform of potential failures and shortcomings or it can be an opportunity to bring back Iran into the international nuclear discussion and for that matter strengthen relationships multi-laterally through confidence building measures. If the relations are viewed through a zero-sum prisoner’s dilemma, then each state will naturally choose the outcome that benefits themselves the most at the expense of others; this decision-making paradigm ultimately results in the collective detriment of gains for all participants. The JCPOA demonstrated state-level cooperative abilities; it should and will not be the last time such nuclear cooperation occurs.

Written by George Deng