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further strengthening of friendly and cooperative relations between the two
countries [PRC and IRI] in all fields ... is conducive to peace and development
in the region and the world. ... Hegemonism and power politics are the cause
of world tension and turbulence, as well as a major threat to world peace and
secu r it y.”^26 In a talk with Iranian media, Li Peng was even blunter: “We are
against the domination of the United States or of a minority over the world,
and against the creation of a new order by the United States in international
relations, and we are in complete agreement with the Islamic Republic of
Iran on this point.” Iranian leaders took Li at his word and proposed that
the IRI and the PRC partner to resolve the Palestinian problem, with China
doing its part by acting as a counterweight to the United States in the Middle
East. Working together, “freedom fighters and justice-seeking people” would
thwart the effort of “some” to stabilize their unrivaled domination in the
world,” Khamenei (by then Supreme Leader) told Li Peng. Third World coun-
tries, “especially those which are in sensitive areas of the globe, should have
close cooperation with each other to resist the US drive for absolute domina-
tion,” Khamenei told Li. In effect, Khamenei was proposing a Sino-Iranian
alliance to drive the United States out of East Asia and the Gulf. Beijing po-
litely declined the invitation. Instead, the next year the PRC normalized re-
lations with Israel.
But while declining Tehran’s invitation to openly challenge the United
States in the Middle East as the USSR had once done, Beijing expanded co-
operation with the IRI in other areas. Shortly after the end of the Iran-Iraq
war, PRC-IRI economic cooperation began to expand. Prior to the 1979
revolution, the United States and West European countries had been Iran’s
major economic partners. But as the Western countries backed out of Iran
under economic sanctions, political risk, and difficult business conditions,
Chinese firms moved in. In 1978, the last year before the revolution, China
provided less than 1 percent of Iran’s imports. By 1991 that had doubled to
2 percent—compared to Germany’s 8 percent. By 2003, China had captured
8 percent of Iranian demand, compared to 11 percent for Germany and 9 per-
cent for France. Roughly half of China’s exports to Iran are machinery, equip-
ment, electrical devices, instruments, and vehicles.
China partnered with Iran in a variety of economic sectors. Chinese equip-
ment went to a wide array of Iranian industries: glass, paper, sugar refining,
fishing, canning, cigarettes, automobiles and trucks, subway locomotives and
carriages, cement, railways, batteries, plastics, shipbuilding, petrochemicals,
and so on. Between 1988 and 2004, China assisted more than seventy-six
major Iranian industrial projects.^27 A very large swath of Iranian industry
was built on the basis of Chinese machinery, equipment, and standards. It
may not be too much of an overstatement to say that the IRI was coat-tailing
on China’s industrialization. Of course, China’s support for the IRI in the