The main objective of China’s engagement in Iraq is to ensure a reliable flow of oil that diversifies Beijing’s imports without making it dependent on Baghdad. From this perspective, there is room to expand the current 10 per cent of Chinese oil imports that originate from Iraq.
Today, between a half and two-thirds of Iraq’s oil production already comes from fields where Chinese companies are involved as investors, producers or in field servicing roles. China dominates this economic sector, even though Beijing remains replaceable as buyer of Iraqi oil due to the short-term and global nature of the oil trade. Looking ahead, the more salient observation is that Iraq’s political elites will increasingly need Chinese investment to maintain current production levels, which produce the revenue streams on which Iraq’s political settlement and social stability depend. Contrary to what some seem to think, however, there does not appear to be a broader geopolitical design behind China’s footprint in Iraq’s oil sector, and neither does a shift in Iraqi oil exports to China come at the expense of the US.
China maintains moderately strong diplomatic ties with Iraq in parallel to its significant economic footprint while it is only marginally relevant from a security perspective. However, China is building the security and diplomatic platforms – notably the Global Security Initiative (GSI) and the China-Arab States Cooperation Forum (CASCF) – that can upgrade its diplomatic and security profile in the medium term. Meanwhile, China seeks to expand its soft power among Iraq’s elites and population through Belt and Road Initiative (BRI) projects and funding, other economic deals, its anti-US rhetoric and public outreach.
Iraq’s main ruling elites, gathered in the Shi’a Coordination Framework, generally view China as a welcome partner while they enjoy an economic boom that is enabled by good oil prices, relative stability (in the sense of security) and consolidated political control. Three factors explain China’s attractiveness to Iraq’s political elites: it pursues a foreign policy that is perceived as less intrusive, more respectful and more predictable than that of the United States; its presence in Iraq diversifies Baghdad’s suite of foreign partners; and, finally, its economic deals create mutually beneficial profits on Iraqi terms. In other words, the intentions of China’s engagement with Iraq align well with Baghdad’s efforts to balance its dealings with the US, Iran and others.
Full report is available at following link:
https://www.clingendael.org/sites/default/files/2025-01/Clingendael_PolicyBrief_China_in_Iraq_0.pdf