China and Iran have drafted a comprehensive military and trade partnership. The deal will make way for about $400 billion worth of Chinese investments into Iran’s key sectors, i.e. energy and military developments, for the next 25 years. 

This agreement would lead to closer military relations between Tehran and Beijing, including joint military exercises, research and weapons development, and intelligence sharing. It would also increase Chinese investments in Iranian banking, telecommunications and transportation. The reported agreement also includes that China would help in building infrastructure for 5G telecommunications network in Iran. It is reported that the deal has been first proposed by Chinese President Xi Jinping during his 2016 visit to Tehran, and the proposed draft was approved by Iranian President Hassan Rouhani and Foreign Minister Mohammad Javad Zarif over the last couple of weeks, but the deal has not been presented to the Iranian parliament yet, and Beijing is still to disclose its terms. 

However, Iranian officials have publicly acknowledged that there is a “pending agreement with China”. The Iranian government has reportedly approved a draft 25-year deal with China on economic and political cooperation. Iran’s foreign ministry spokesman, Abbas Mousavi, said it was a proud moment for Iranian diplomacy.

Tehran has not revealed the full details of the agreement, but a previous report by the Petroleum Economist suggests that Iran is set to grant huge concessions to China, including significant discounts on oil and gas, and the ability to delay payments for up to two years. It has also allowed China to pay in soft currencies. China’s more pronounced interest in Iran should alert the US to review its past approach to Tehran. China would also be granted the first refusal on opportunities to become involved with any petrochemicals projects in Iran. 

The deal comes at a time when the Irani economy has been completely damaged by US sanctions, which ensured that any country in the world that deals with Iran would be cut off from the global financial system.