Rising from the yellowish, treeless plains so typical for central Iran stands a square, three-dimensional labyrinth of pipes and conveyor belts, topped by a silver chimney that glitters in the summer sun. Sanctions against Iran failed to halt the construction of the complex, a steel mill that went into operation in September and now churns out ingots and billets. The sanctions also did not stop Sheng Kuan Li, a wealthy Chinese businessman, from pouring $200 million into the project.
Mr. Li is one of many Chinese investors who in recent years worked around the sanctions imposed on Iran by the U.S. and other Western powers over Tehran’s nuclear programme. His steel mill and other similar endeavours are the result of a strategic pact that gives China a much-needed western gateway to West Asian markets and beyond, and that has saved Iran from international isolation and economic ruin. On Saturday, both countries agreed to increase trade to $600 billion in the coming decade. That agreement was made during a meeting between Iran’s leaders and China’s President Xi Jinping, who late last week became the first foreign leader to visit Iran after most international sanctions were lifted. China has relied on Iranian oil and views the country as a vital link in Mr. Xi’s so-called Silk Road strategy, an ambitious agenda that seeks to extend China’s economic influence westward.
The deep Chinese footprint in Iran does not only manifest itself in the tens of thousands of inexpensive cars that have flooded the streets of Tehran in the past few years. Investors like Mr. Li, who has built two other factories here, as well as Chinese state companies, are active all over the country, building highways, digging mines and melting steel. In Tehran, the Chinese have been involved in the construction of a huge elevated expressway and the building of the Niayesh Tunnel, one of the longest urban tunnels in the world. The city’s metro system was built from scratch, starting in 1995, with Chinese capital and Chinese engineers. The train cars that run on it are Chinese, too.
“Westerners visiting the capital often wonder how we managed to pull off such ambitious projects during the heaviest sanction regime in history,” said Mohammad Reza Sabzalipour, Iran’s World Trade Center representative. “Well, we did it with the help from our Chinese friends.” Thirst for cheap crude oil and enthusiasm for the Silk Road project, which incorporates the goal of unlocking China’s isolated western provinces, brought the Chinese to Iran, the only country in West Asia where the U.S. had no presence. Iran had long welcomed the relationship, but after sanctions started to squeeze the economy at the end of the last decade, the country gained a special status, and China’s slow but steady advance here began.
“We are Iran’s biggest trading partner for six years in a row,” Mr. Xi wrote in an open letter to the Iranian people, Xinhua, China’s state news agency, reported on Thursday, a day before his arrival on a West Asian tour that would also take him to Saudi Arabia and Egypt. During the Iran-Iraq war, China sold weapons, including Silkworm missiles, to Iran. China looked the other way when the Iranians sought to advance their missile technology, and assisted in developing the country’s nuclear energy programme.
“After the revolution we exchanged the Western frowns with the smiles from the East,” said Asadollah Asgaroladi, one of Iran’s wealthiest businessmen and the head of the Iran-China chamber of commerce. “They continue to smile at us.”