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When China's leader Xi Jinping arrives at the White House tomorrow, Iran is likely to be on their agenda. China is Iran's largest trading partner, buying more than 80% of Iran's oil exports. That stopped when the U.S. imposed a naval blockade on the Strait of Hormuz, but China is quietly finding ways around that blockade. NPR's Rob Schmitz reports.
ROB SCHMITZ, BYLINE: In normal times, that is, when the U.S. is not blockading Iranian ports in the Strait of Hormuz, China imports Iranian oil through a careful step-by-step method of circumventing U.S. sanctions. Ships mask their identities and offload Iranian crew to other vessels off the coast of places like Malaysia, so that these China-bound ships can say their oil does not come from Iran.
AHMED ABOUDOUH: And then these shipments go to independent refineries or teapot refineries.
SCHMITZ: That's Ahmed Aboudouh of the London-based think tank Chatham House.
ABOUDOUH: Because these refineries are out of the United States reach and out of the sanction system.
SCHMITZ: As Aboudouh explains, these teapot refineries, mainly off the coast of China's Shandong Province, then offload the Iranian oil at a discount of 8 to $10 a barrel. It's a heck of a deal for Beijing, and that's why Aboudouh says these refineries account for up to a quarter of all oil imported into China.
ABOUDOUH: But obviously, now this oil has dried up.
SCHMITZ: That's because of the U.S. naval blockade in the Strait of Hormuz. Beijing has gotten around this blockade by sending tankers with mostly Saudi oil through the Bab el-Mandeb strait on the southern tip of the Red Sea, a treacherous journey that passes territory controlled by the Houthis, who have attacked and sunk vessels with missiles and drones. But the Iranian-backed group has left the Chinese alone, says Aboudouh.
ABOUDOUH: From what we know, many ships raise the Chinese flag on them or declare through private channels that they have Chinese nationals on board, and this would be enough for the Houthis to avoid targeting these ships.
SCHMITZ: It's a reminder of how much influence China has in the region. But does Beijing have enough influence to persuade the U.S. to stop its blockade on the Strait of Hormuz, with just 12% of China's oil imports coming, or, as is the case now, not coming from Iran? Henry Tugendhat of the Washington Institute for Near East Policy says China can afford to wait.
HENRY TUGENDHAT: In terms of does China need this ceasefire right away? I think it's shown that it can wait a little bit if it thinks that Iran can get a stronger negotiating position against the U.S. in the run-up to the midterms.
SCHMITZ: On the Eve of the summit between Xi Jinping and President Trump, Tugendhat says Trump seems more eager to resolve the conflict with Iran to help Republicans in November. He says Xi Jinping, on the other hand, appears fine with giving up Iranian oil in the short term to let the pressure on the U.S. build. After all, China relies primarily on coal to fuel its increasingly electrified economy, with more than 65% of new car sales in China last month registered as electric vehicles. Imported oil is becoming less important in China. And according to Bill Figueroa, international relations professor at the University of Groningen in the Netherlands, as the U.S. war with Iran continues, China's image as a force of stability in the region grows.
BILL FIGUEROA: They are building bridges and infrastructure rather than destroying it. So, you know, there is definitely a substantial difference there, and I think one that especially right now, you know, China is kind of looking like the better, the more balanced and the more stable partner of the two.
SCHMITZ: And, says Figueroa, the longer the U.S. is involved in what he calls a military quagmire with Iran, the better off China's image as a stable regional partner will be.
Rob Schmitz, NPR News.
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