Premier Wen Jiabao is visiting Saudi Arabia and participating in talks there that may shift the dynamic of China’s relationships in the Middle East, especially with Iran. From the New York Times:
Mr. Wen’s visit to Saudi Arabia, his first in two decades and part of a six-day swing through the region, comes as China faces new pressure to reduce its reliance on Iranian oil in concert with Western efforts to punish Iran for its nuclear program. President Obama recently signed legislation that could potentially limit Chinese access to the American financial system if Beijing does not scale back its trade with Iran, and the European Union is considering large reductions in its purchases of Iranian oil as well.
Saudi Arabia, a regional rival, has its own reasons to deter Iran from its nuclear program, and American diplomats hope that the Saudis and other Persian Gulf nations will help assure China, Iran’s biggest customer, of access to alternative oil supplies.
China is also an ally of Syria’s and, along with Russia, one of two members of the United Nations Security Council blocking any consideration of potential United Nations actions against President Bashar al-Assad of Syria for his deadly crackdown on protesters calling for his exit. Saudi Arabia has led the Arab states in criticizing Mr. Assad, who also has close ties to Iran.
A new law in the US would penalise foreign financial entities dealing with Iran’s central bank in oil trade by barring them from US financial markets. The US treasury secretary Geithner said “cutting off the central bank from the international financial system will reduce the earnings Iran derives from its oil exports.” However, nations can be exempted if they demonstrate a “significant reduction” in Iranian oil imports, and Geithner also described the measure to be “in the early stages” and financial institutions have six months to comply before the US decides whether to impose sanctions.
[…] China’s response was vague because it might find it difficult to replace 600,000 barrels a day it imports from Iran. China has been persistently against sanctions imposed unilaterally. But China is worried about its banks and how they may suffer if they continue to deal with Iran, and how all this might reflect on China’s exports to the US. There are reports of reduced imports from Iran this month, but some analysts believe this is because of a price dispute, something unlikely given Iran’s situation.