When China turned down an opportunity to join the United States and other partners in naval patrols to protect its oil tankers in the Persian Gulf and Strait of Hormuz last year, despite the heavy reliance which it now has on Middle East oil, Beijing signaled its confidence that it has nothing to defend against in what for others have been volatile waters.
Since May of last year, Iran has been the main culprit (although Tehran denies it) in a string of attacks on oil shipping in the Gulf and its nearby waters. But those attacks have primarily targeted American, British, and Saudi assets.
Were oil shipping out of the Gulf to be interrupted by armed conflict, China, though highly vulnerable, is likely to feel that its long-term commitments to Iran, including an ostensible $400 billion investment pledge to Iran’s oil and gas sector, are its armor against any foul play that Iran may visit on oil shipments under other flags.
Fortune reported in January of this year that 13.6 million barrels of oil per day are shipped out of the Persian Gulf and through the Strait of Hormuz to shipping routes that cross the globe.
Through that strait sails a major part of the energy that fuels the economies of countries around the globe.
Of the daily 13.6 million barrels that pass through Hormuz, 3.5 million barrels, or nearly 26 percent, go to China, according to the Fortune report.
For China, those 3.5 million barrels a day represent more than 38 percent of its total daily imports of oil. Fortune cited a Wood Mackenzie report that projected that China would import 9.1 million barrels per day in 2020.
A final statistic to ponder is that China is now the largest oil importer in the world, relying on supplies abroad for approximately 75 percent of its crude. So that 38 percent that it brings through the Strait of Hormuz is a big deal.
Given those statistics, therefore, we might expect that China would have a vested interest in making sure that not only its own oil supplies, but also those of other countries, are protected from the escalated threats to tanker shipping in the Gulf, Hormuz, and the Gulf of Oman. Even if Chinese ships are not targeted by Iran on the strength of the two nations’ cozy relationship, a conflict among third-party actors could severely impact shipping for all.
Indeed, two coalitions of several nations each are now actively patrolling the waters of the Strait of Hormuz to ensure the security of oil supplies traversing the often-risky waterway.
France is leading an eight-member coalition of EU countries, which became fully operational in February of this year. Supporting France are Belgium, Denmark, Germany, Greece, Italy, the Netherlands, and Portugal. Titled the European Maritime Awareness in the Strait of Hormuz (EMASoH), the coalition’s stated aim is “ensuring the freedom of navigation in the Gulf.”
The military component of the EU initiative, Operation Agenor, is based in the United Arab Emirates (UAE), where France has a base in Abu Dhabi. France says the mission of EMASoH is de-escalation of tensions and “is not aimed at any particular state,” a disingenuous denial of the coalition’s goal to counter Iran’s attacks on oil tankers.
The second coalition, led by the United States, includes Australia, Bahrain, Israel, Saudi Arabia, the United Arab Emirates, and the United Kingdom. The grouping’s mission, dubbed Operation Sentinel, is “to promote maritime stability, ensure safe passage, and de-escalate tensions in international waters throughout the Arabian Gulf, Strait of Hormuz, the Bab el-Mandeb Strait (BAM) and the Gulf of Oman.”
Most member states of the EU’s Operation Agenor had been wary of joining a U.S.-led security framework, “fearful of undermining their efforts to save the landmark Joint Comprehensive Plan of Action nuclear deal with Iran that was signed in 2015,” The Defense Post reported last November.
And, to the surprise of many, as recently as last summer, China was contemplating joining the American-led coalition. Ni Jian, the Chinese ambassador to the UAE, said on August 6, 2019 that “If there happens to be a very unsafe situation we will consider having our navy escort our commercial vessels,” Reuters reported. The Chinese Embassy in Abu Dhabi went on to comment, “We are studying the U.S. proposal on Gulf escort arrangements.”
Ultimately, China demurred, and does not seem to have changed its mind.
When Xinhua, the state-run Chinese news service, reported on the French-led EMASoH on January 20, it made no reference to any plans that China itself might have to join in the international effort to safeguard oil shipping in the Middle East.
On the surface, therefore, China seems to have nothing to fear from Iran’s mischief in Middle Eastern waters. But other reasons may factor into China’s decision to either go it alone or stay out of the security framework for the Gulf and its waters altogether.
The first is that China may not be altogether confident of its relationship with Iran. Despite the 25-year comprehensive strategic partnership agreement signed in 2016, to which the purported $400 billion oil and gas sector pledge was added, figures show that the Chinese-Iranian trade relationship has actually deteriorated since 2016. “Exports to Iran have now stabilized at just under $1 billion each month,” writes Jacopo Scita in Bourse & Bazaar. The strategic partnership “included agreements intended to boost bilateral trade to $600 billion within a decade,” Scita writes.
With only six years left in that decade, the ability to achieve $600 billion in trade per year, with volumes at less than $1 billion a month now, seems diminished, if not impossible.
Second, the $400 billion oil pledge from China may itself not be true. Scita writes that Iranian officials and business leaders have variously said that they had not heard about it, and that the news of its existence was “a joke.”
Those two reasons combined suggest that the future of the Chinese-Iranian relationship may hit some turbulence, as both sides grapple with promises made, but potentially not kept, and pledges reported, but possibly not true.
The potential onset of disappointment and displeasure in the relationship is definitely not the time for China to suggest to Iran that it doesn’t trust Tehran to behave in the Gulf, as engaging in security patrols would certainly signal.
China has naval capability in the region, by virtue of its base in Djibouti. That base is in range of the Bab al-Mandab Strait at the mouth of the Red Sea, which controls access to the Suez Canal, and the Strait of Hormuz. China therefore could support a go-alone mission or a coalition of international partners; indeed, the base’s stated purpose is to provide logistical support for China’s ongoing participation in international anti-piracy missions in the Gulf of Aden.
The fact China is refraining from joining or starting its own patrols in the Middle East suggests that it feels its best course is to hold to the status quo. By doing nothing that could appear confrontational to one side, and by refraining from cooperation with those with whom confrontation would almost certainly arise on the other, China is neither committing to reducing risk in the Gulf, nor taking a share of the responsibility should something untoward happen. Governments around the globe would do well to apply the lessons learned from China’s stance on Gulf security to analysis of other aspects of China’s engagement with the world.