Last week’s surprise announcement of a China-brokered deal to reestablish diplomatic ties between Saudi Arabia and Iran became the latest signal of China’s geopolitical prowess and capacity to replace the United States as the region’s mediator. As the largest trading partner of both countries, China’s foray into conflict resolution is backed by its capacity as an importer of the region’s commodities, as well as its standing as a critical growth market for the Saudis and as an economic lifeline for Iran amid sanctions.
China’s role as a mediator in the region follows President Xi Jinping’s visit to Riyadh last December during a Gulf Summit, as well as a state visit to Iran made last month. In Riyadh, Xi’s visit emphasized and encouraged yuan-denominated trade, citing benefits against an appreciating dollar that has led to currency volatility among Gulf exporters. Last month’s visit with Iranian President Ebrahim Raisi concluded with a joint statement to lift sanctions imposed upon Iran as a prerequisite to re-implementing the Joint Comprehensive Plan of Action (JCPOA), the landmark agreement that had curbed Iran’s nuclear program in exchange for sanctions relief.