More than a decade after the announcement of the Belt and Road Initiative (BRI), its transformation of global supply chains and trade flows has garnered significant attention. Nevertheless, despite being identified as a crucial country in the initiative, Iran’s place within the BRI is poorly understood. More problematically, when Iran is discussed in the context of the BRI, it is primarily seen through a geopolitical lens. While this approach remains important, it obscures the domestic motivations that drive Beijing’s and Tehran’s cooperation within the BRI.
For Chinese officials, Iran has long been viewed as a gateway to energy, supply chains, and markets that could stimulate the sustainable development of China’s interior. This is important given Chinese officials’ linkage of development and social stability. Iranian officials view China as a key partner in its efforts to become a central hub along Eurasian economic corridors, a source of development finance and technology, and a market for its goods. This alignment of domestic socioeconomic interests is a key driver of continued cooperation despite the structural challenges presented by U.S.-led sanctions.
Chinese officials have long been concerned with the country’s uneven development due to the perception that underdevelopment is the root cause of social instability and, therefore, insecurity. Consequently, leaders of underdeveloped interior provinces have been proactive for several decades in addressing this issue by pursuing cross-border initiatives that promote economic activity. It is these efforts that became the foundations for the economic corridors that ultimately were incorporated into the BRI framework. The China-Central Asia-West Asia Economic Corridor (CCAWAEC) is an example of this process given its origins in Xinjiang’s “double-opening” strategy.
The CCWAEC embodies a long-standing view among Chinese officials that Iran plays an important role in Eurasian connectivity. Its position on the continent is not simply viewed as strategic in a geopolitical sense, but as vital for the conduit of new supply chains that can link China’s underdeveloped interior and western provinces to markets in the Middle East, Africa, and Europe, including Iran’s own market of over 90 million.
Just as importantly, however, is the role that Iran currently plays as an energy supplier to China, particularly given the hope that Iran could one day be part of a “Pan-Asian Global Energy Bridge.” This envisions extending the China-Central Asia gas pipeline to Iran, thus integrating it into China’s West-East pipeline, which distributes energy to much of the country. In this framing, Iran’s role as a node in the CCAWAEC and energy supplier supports China’s broader vision of linking its western regions to global markets and securing long-term economic and social stability.
For their part, Iranian officials have sought to restore the country’s historical role as a Eurasian trade hub. Tehran’s geographic position – in proximity to the Caucasus, Central Asia, West Asia, the Middle East, and South Asia – has long made it a natural land bridge in transcontinental trade routes. To pursue this effort, Iran’s leaders developed the “Look East” policy in 2005, which has become a principal plank of the nation’s foreign policy.
As a result, Iran has not only backed the BRI, but also the Trans-Caspian International Transport Route, or “Middle Corridor,” and the International North-South Transport Corridor. These corridors offer cost-effective east-west and north-south trade routes through Iran’s territory by significantly reducing transit time compared to maritime routes such as the Suez Canal. Moreover, Iran’s leaders recognize that the country’s location at the heart of the world’s “energy ellipse” – which encompasses regions holding about 75 percent of global energy reserves – allows it to promote land-based energy transit corridors. This makes Iran especially attractive for China and landlocked Central Asian states seeking to diversify their energy flows.
From Tehran’s perspective, the 2016 Comprehensive Strategic Partnership agreement with Beijing lays the foundation for deeper economic and infrastructural cooperation, with projects that complement the two countries’ efforts to establish and sustain new supply chains through investment in regional connectivity. The BRI serves as the figurative and literal conduit for realizing this partnership and making Iran a Eurasian hub. Additionally, Tehran has been keen on leveraging its partnership with Beijing to institutionalize its connectivity strategy through active membership in key regional organizations aligned with the BRI, including the Asian Infrastructure Investment Bank, the Shanghai Cooperation Organization, and, more recently, BRICS.
Despite the convergence of vision between the two countries, the implementation of the BRI in Iran has been difficult. On the one hand, China and Iran have become more economically integrated. While oil remains a key commodity in their bilateral trade, non-oil trade has expanded over the past decade. As a result, China has become the main destination for Iranian exports and China is the second-largest source of Iranian imports. China has also demonstrated the viability of linking its markets to Europe through Iran by establishing the Qom (Iran)-Yiwu (China)-Europe route in 2024. The sustainability of this route may finally bring to fruition the two countries’ efforts to establish new economic corridors and supply chains.
On the other hand, U.S. secondary sanctions, such as those under CISADA, continue to stifle Iran’s efforts to fully operationalize these corridors. China’s agreement to invest some $400 billion in Iran over 25 years has been impacted by the possibility of sanctions, making China’s major state-owned enterprises and banks reluctant to invest directly in Iran. As a result, much of China’s investment in Iran’s capital-intensive sectors has been done through a form of bartering whereby the latter pays the former for equipment, technology, and expertise in oil, or in payments denominated in renminbi. These two mechanisms allow Chinese and Iranian entities to avoid reliance on Western banks and the dollar, thereby evading U.S. sanctions.
Iran’s evolving role within the BRI reflects Beijing’s and Tehran’s deeply rooted domestic motivations. For China, Iran offers a critical link to energy resources and new markets, supporting the development and stability of its interior provinces by integrating them into global supply chains. For Iran, partnership with China is a pathway to revitalize its historical role as a Eurasian hub, attract investment, and circumvent the constraints imposed by international sanctions.
Despite persistent challenges – most notably, U.S.-led sanctions – the alignment of domestic socioeconomic interests has been a key driver for a sustained and deepened bilateral relation. The expansion of trade and infrastructure investment, often financed through alternative mechanisms, demonstrates that the BRI’s impact in Iran is as much about internal development and resilience as it is about geopolitics. This duality ensures that Iran’s engagement with the BRI will remain important, warranting continued analysis beyond the traditional geopolitical lens.