US-Iran tensions threaten China's billions in Iranian infrastructure investments

Escalating tensions between the United States and Iran potentially pose significant risks to China's multi-billion-dollar investments in Iranian infrastructure projects over the past twenty years.

The Russian regional expert said the US moves in the Persian Gulf, currently following deadly clashes between protestors in Tehran and government forces, which led to at least 3,100 deaths, could potentially undermine Beijing's Belt and Road Initiative (BRI/OBOR) in the region, a Russian political analyst said on January 26.

When Tehran and Beijing signed their 25‑year “comprehensive strategic partnership” in 2021, Iranian officials briefed local media on a headline figure of $400bn in prospective Chinese investment over a quarter century, largely in energy and infrastructure. That number was never confirmed in detail by Beijing, and was framed more as an upper‑bound roadmap than a binding financing pledge. In practice, Chinese economic engagement with Iran has remained cautious and heavily constrained by US sanctions, banking risk and Iran’s own regulatory environment.

Kirill Kotov, a member of the Moscow Expert Club and the Public Chamber of Moscow Oblast, told local Russian-language FederalPress that joint initiatives, including transport infrastructure development, modern technologies, and energy sector projects, have become key to strengthening Chinese presence in the region.

"According to unconfirmed but theoretically possible data, China and Iran interact through a barter scheme: Iran supplies oil to China, and in return receives technologies and support in various spheres – from agriculture to military equipment," Kotov stated.

This model proves extremely beneficial for Beijing, which requires stable oil supplies for its economy and for diversifying its energy sources, particularly following the loss of Venezuelan oil and sanctions on Russian supplies.

The Russian economics and intelligence expert said that losing Tehran as a reliable partner would create problems not only for China's energy security but also for its strategic interests in the region.

China views Iran as an important hub in its logistics routes connecting Europe, Africa and Persian Gulf countries.

A regime change operation in Tehran towards a more pro-American government, potentially led by the Israeli-backed former crown prince Reza Pahlavi, could lead to the loss of both invested Chinese capital and strategic corridors, threatening the Belt and Road Initiative, which depends on stability and friendly relations with Iranian authorities.

"In general, the Middle East represents one of the key zones of influence for China, and the loss of political influence in Iran would be a serious setback,” he said.

“If the US can ensure a change of power in the Islamic Republic, this will create an unprecedented threat to Chinese interests in the region, calling into question not only economic but also political prospects for China," Kotov concluded.

The analyst suggested current regulation of the issue proceeds through behind-the-scenes negotiations that will never become public, however, Russian and Chinese officials have been read into the ongoing talks. The assessment comes as the US has deployed significant military assets to the region, including the USS Abraham Lincoln carrier strike group heading to the Arabian Sea, with American officials describing the deployment as an "armada."

On the ground, Chinese involvement has concentrated in a handful of energy and transport schemes, with a mix of engineering contracts, supplier credit and joint ventures rather than large equity stakes. Some high‑profile projects announced in the past decade have stalled, been restructured, or quietly dropped as sanctions tightened and Western technology became harder to access.

Others have moved ahead only slowly, as Chinese firms seek guarantees, exemptions and creative payment mechanisms to shield themselves from secondary sanctions. The result is a patchy project pipeline that falls well short of the transformational investment Tehran once hoped for.

Kirill Kotov is a project manager specialising in anti-crisis and electoral internet communications. He serves as a member of the Public Chamber of the Leninsky District in Moscow Region. Kotov is a winner of the "Leaders of Internet Communications" competition and recipient of the "Digoria" National Prize for Young Political Scientists of Russia in the Political Communications category.