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FACTBOX - Ties binding China and Iran

BEIJING (Reuters) - The United States has welcomed China’s decision to join talks about proposed new sanctions on Iran over its nuclear activities, but Beijing has been quiet about how far it may go in backing possible sanctions.

Here are key facts about ties between China and Iran.

IRAN A BIG OIL SUPPLIER, BUT NOT THE BIGGEST

Iran is a major foreign supplier of crude oil to China, the world’s second-biggest consumer of oil after the United States. The U.S. has urged China to turn to other suppliers.

In 2009, Iran was the third-biggest foreign source of crude oil to China, supplying 23.1 million metric tonnes of crude, or 11.4 percent of China’s total crude imports.

But in the first two months of 2010, China imported 2.53 million tonnes of Iranian crude, a drop of 37.2 percent compared to the first two months of 2009.

That made Iran the fourth-ranked foreign source of crude for China so far this year, behind Russia, Angola and top supplier, Saudi Arabia. Analysts have said China’s reduced imports of Iranian oil may be a blip reflecting market factors, not political considerations.

CHINA’S ENERGY, TRADE STAKES IN IRAN

Trade between China and Iran has grown quickly, dominated by Iran’s energy exports. In 2005, bilateral trade was worth $10.1 billion. In 2009, it was worth $21.2 billion, though that was a fall of 23.6 percent from 2008, reflecting the financial crisis and the falling dollar value of oil.

China’s exports to Iran in 2009 were worth $7.9 billion, a decline of 3.0 percent from 2008. Main Chinese exports to Iran include machinery and equipment, motor vehicles, textiles and consumer goods.

China is an investor in Iranian oil and gas, and Chinese state-owned energy conglomerates have been exploring for new fields there, with an eye to expanding their stake.

China’s top energy group, CNPC, this year clinched a deal to develop phase 11 of Iran’s South Pars gas project and expand its operations in Iran.

In the oil sector, CNPC is already in a deal to develop Iran’s North Azadegan field into a 120,000-barrel per day field at a cost of at least $2 billion.

China’s Sinopec Group reached a $2 billion deal to develop Iran’s Yadavaran oil field in December 2007.

Industry sources have said China has also been selling gasoline to Iran, which lacks refining capacity to meet domestic demand. Chinese customs statistics do not record any shipments, which may go through intermediaries.

CHINA A DIPLOMATIC PARTNER

China has kept close bilateral ties with Iran, but also backed past U.N. Security Council resolutions criticising Tehran’s stance on nuclear issues.

Western powers criticised the disputed election of June 2009 that kept President Mahmoud Ahmadinejad in power and condemned subsequent violence and arrests directed at anti-government protests. China did not openly criticise the Iranian government.

In October last year, Chinese Premier Wen Jiabao told the visiting First Vice President of Iran, Mohammad Reza Rahimi, that his government wanted to “maintain high-level contacts” with Tehran.

CHINA WORRIED BY NUCLEAR PLANS, BUT WANTS TALK, NOT SANCTIONS

China’s support for Iran is not unreserved. Beijing wants to cast itself as a responsible supporter of nuclear non-proliferation and has voted for previous U.N. Security Council resolutions pressuring Iran.

But Chinese diplomats often say sanctions are not the “fundamental solution” to the Iran nuclear dispute, and they want more focus on negotiations.

Beijing has followed a pattern of approving U.N. decisions critical of Tehran, but resisting sanctions that could hurt its energy and economic ties with Iran.

In July 2006, China backed U.N. Security Council Resolution 1696 that threatened sanctions on Iran, and in December of the same year it supported Resolution 1737, which imposed sanctions on Iranian nuclear imports and exports.

It supported two further resolutions, one in 2007 which broadened the sanctions to cover a ban on Iranian arms exports, and another in 2008 which criticised Iran for refusing to suspend uranium enrichment.

In November 2009, China supported a resolution by the International Atomic Energy Agency board of governors that criticised Iran for secretive uranium enrichment activities.

Sources: Reuters; Chinese Monthly Exports & Imports, December 2009; U.S. Energy Information Administration www.eia.doe.gov; Chinese Ministry of Commerce www.mofcom.gov.cn; United Nations www.un.org/; John Garver, Flynt Leverett and Hillary Mann Leverett, "Moving Slightly Closer to Iran: China's Shifting Calculus for Managing Its 'Persian Gulf Dilemma"

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