The 25-year agreement that wasn’t what you think

In 2021, China and Iran signed a 25-year cooperation agreement, widely reported as a $400 billion commitment. The number made headlines. What made fewer headlines: most of that investment never materialized. Chinese companies remain deeply cautious about Iran not for political reasons, but for brutally practical ones. Sanctions make banking nearly impossible. The rial is unstable. And Chinese firms, contrary to their image as instruments of state strategy, are mostly commercial actors who go where money can actually be made and moved.

What China actually buys and what it doesn’t buy

Yes, China purchases the majority of Iran’s oil exports, at a discount, often through intermediaries. This is real leverage but it’s leverage born of Iran’s isolation, not of Chinese strategic design. Beijing didn’t create Iran’s dependence; Western sanctions did. China simply occupies the space that was vacated.

And oil purchases don’t translate into political control. Iran has repeatedly acted against Chinese preferences, escalating with Israel, arming regional proxies, advancing its nuclear program. If Beijing held the keys to Tehran, none of this would look the way it does. The Islamic Republic’s entire founding identity is resistance to foreign control — any foreign control. A country built on expelling one hegemon does not quietly accept another.

The view from the ground

Inside Iran, I found attitudes toward China that surprise both Western and Chinese readers. There is appreciation. Chinese goods fill the bazaars, Chinese companies build the metro. But there is also wariness, and sometimes resentment. Ordinary Iranians often see China as an opportunist profiting from their isolation, not a savior. “China buys our oil cheap and sells us everything expensive,” a shopkeeper in Esfahan told me. That sentence contains more truth about the relationship than most think-tank reports.

Why the myth persists

The “China controls Iran” narrative survives because it’s convenient for everyone. For Washington, it turns a complex regional problem into a familiar great-power story. For Beijing, the perception of influence costs nothing and flatters its global standing. For Tehran, the appearance of a powerful patron strengthens its negotiating position. Everyone benefits from the myth except those trying to actually understand the region.

The reality is less dramatic: two states in a marriage of convenience, each hedging against the other, bound by oil and isolation rather than trust or alignment. That’s not a bloc. It’s a transaction.

I’ve spent the past decade living and writing across Iran, Saudi Arabia, Lebanon, and the wider Middle East. I write about this decade in my book-in-progress, “Fringe of Empires.” For more field notes, subscribe below.