This summer, Iran might finally have provided China a viable solution to its “Malacca Dilemma.” In the process, Beijing finds new geopolitical leverage with Washington, writes Daniel Markey.

For at least the past two decades, Chinese leaders and strategists have viewed the Strait of Malacca and the other narrow maritime passageways linking the Indian Ocean to the South China Sea as critical strategic liabilities. As of 2017, 80% of China’s maritime oil imports flowed through Malacca, a congested waterway that reaches only 1.7 miles across at its narrowest point. Passage through the strait can be slowed by shipwrecks and disrupted by terrorism or piracy. In 2003, however, Chinese president Hu Jintao famously pointed out another threat keenly felt by Beijing: that “certain powers have all along encroached on and tried to control navigation through the strait.” By “certain powers,” Hu meant the United States, which to this day holds important geopolitical leverage over China because the U.S. Pacific Fleet can threaten to squeeze China’s principal lifeline for energy and trade.

To better secure its shipping lanes, Beijing has invested in a significant expansion of its own navy, building new ships, submarines, and even a port facility and base in Djibouti at the mouth of the Red Sea. Equally important, China has diversified its energy supply portfolio to include overland suppliers in Russia and Central Asia. President Xi’s signature “Belt and Road Initiative,” is designed, at least in part, to improve China’s overland trade and transit options across continental Eurasia to the Middle East and Eastern Europe by a web of new roads, rails, and pipelines.

China cannot entirely secure or diversify its way out of trouble.

Still, the Malacca Dilemma persists; China cannot entirely secure or diversify its way out of trouble. China’s People’s Liberation Army has made remarkable strides in implementing a military strategy designed to create problems for the U.S. Indo-Pacific Command and other forces operating close to Chinese shores, but that is a far cry from being able to secure China’s shipping lanes end to end from Africa and the Middle East. And for now, shipping cargo overland across Asia costs far more than shipping by sea. The infrastructure investments required to transform Eurasia into a real East-West superhighway will not happen overnight, hampered as they are by the region’s vast, forbidding terrain and fractious politics.

That’s where Iran comes in. In early July, word leaked of a twenty-five year “comprehensive partnership” deal being negotiated between Tehran and Beijing, in which the two would join forces across many fronts, from energy trade and technology sharing to enhanced military and intelligence cooperation. The terms of the arrangement remain secret, unratified by Iran’s parliament, and most of the specifics are clearly exaggerated for political effect and probably have yet to be decided by the two sides. That said, one of the most striking features of the pact is found in proposed Chinese investments along Iran’s coast, including expansion of port facilities at Jask and Chabahar.

The location of these ports is critical. They are situated to the east of the Strait of Hormuz, astride the world’s only maritime chokepoint more consequential than Malacca. Nearly a third of all seaborne oil passes through Hormuz, and nearly 80 percent of that flows on to Asian markets. If China could control passage through Hormuz, it could directly threaten the interests of Middle Eastern energy exporters like the UAE and Qatar as well as Asian energy buyers like Japan, not to mention creating headaches for the U.S. Fifth Fleet stationed in Bahrain.