Wednesday's damning IAEA report on the Iranian-nuclear program has turned the spotlight on Tehran's largest trading partner: the People's Republic of China.
Immediately after the report's release Beijing warned that the report – which confirms Iran's efforts to harness nuclear energy for weapons manufacture – could spawn "turmoil" in a turbulent Middle East.
Foreign Ministry spokesman Hong Lei said China was "studying" the report, and repeated a call to resolve the issue peacefully through talks.
"I wish to point out that China opposes the proliferation of nuclear weapons, and disapproves of any Middle Eastern country developing nuclear weapons. As a signatory to the Nuclear Non-Proliferation Treaty, Iran bears the responsibilities of nuclear non-proliferation," he said Wednesday.
"The Iranian side should also demonstrate flexibility and sincerity, and engage in serious cooperation with the [IAEA]... I want to stress that avoiding fresh turmoil in the Middle Eastern security environment is important for both the region and for the international community."
For years the Chinese government has walked a fine line on Iran's atom program, maintaining extensive trade ties with Tehran, while doing its best to avoid antagonizing the West.
China, which as a permanent member of the UN Security Council wields veto power, has backed previous council resolutions condemning Tehran's nuclear work and supported limited sanctions against it. Harder-hitting sanctions, however, have yet to receive Beijing's backing.
A US official told Reuters that because of the opposition of both China and Russia – Ira's seventh-largest trading partner, which helped it build the Bushehr nuclear facility – chances for tougher Security Council sanctions are slim. On Wednesday Russian officials said new sanctions are "unacceptable" to Moscow, and called for continued talks with the Iranian regime.
Mark Dubowitz, executive director of the Foundation for Defense of Democracies and head of its Iran Energy Project, said Chinese companies have continued supplying significant quantities of Iran's refined petroleum in violation of US sanctions laws.
"The Obama administration has assured Congress that Beijing has agreed to do no new deals, and to slow-walk its existing deals," he told The Jerusalem Post by e-mail from Washington. "Given that Chinese companies signed over $40 billion in new energy deals in recent years, it's unclear whether this commitment to do no new deals covers these billions of deals already in the pipeline, and how quickly China is moving ahead in implementing what it considers to be existing deals."
China's People's Daily newspaper said the nuclear standoff between Iran and the West could erupt into military conflict.
"It is clear that contention between the various sides over the Iranian nuclear issue has reached white hot levels and could even be on the precipice of a showdown," the newspaper – a Communist Party organ that generally presents the government's official line – said in a front-page commentary.
China's official Xinhua news agency also suggested Beijing would respond warily to the report. The UN watchdog still "lacks a smoking gun," the agency said in a commentary.
"There are no witnesses or physical evidence to prove that Iran is making nuclear weapons... In dealing with the Iran nuclear issue, it is extremely dangerous to rely on suspicions, and the destructive consequences of any armed action would endure for a long time."
Iran shipped over 20 million tons of oil to China over the first nine months of this year, an increase of almost a third since the same period last year. Overall trade between the two countries rose 58 percent over that period, to almost $33 billion.
"The onus [in the international community] will really be on China, as the only country whose economic relations with Iran have grown," Suzanne Maloney, an Iran expert at the Brookings Institution in Washington, told Reuters.
Ilan Berman, vice president of the American Foreign Policy Council, wrote in an op-ed in Wednesday's New York Times that China must be made to feel that its business with Iran is no longer worthwhile.
"In recent years, China's economic dynamism has brought with it a voracious appetite for energy. This has made energy-rich Iran a natural strategic partner. In 2009, Iran ranked as China's second largest oil provider, accounting for some 15% of Beijing's annual imports," Berman wrote. (The European Union is the leading consumer of Iranian oil.) "In exchange, China has aided and abetted Iran's quest for nuclear capacity.
Diplomatically, it has done so by complicating oversight of Iran's nuclear program, and by resisting the application of serious sanctions against Tehran," Berman continued.
"Chinese leaders have become convinced that Washington prioritizes bilateral trade with Beijing over security concerns about Iran, and that it therefore won't enact serious penalties for China's dealings with Iran.
The last, best hope of peacefully derailing Iran's nuclear drive lies in convincing Beijing that 'business as usual' with Tehran is simply no longer possible."