Image copyright AFP Image caption China is caught in the middle as the US tackles Iran over its nuclear programme

As the West increases its pressure on Iran, the latest effort being a concerted campaign to impose an oil embargo on Tehran, China finds itself in a tough dilemma.

As Tehran's largest trading partner and customer for its crude exports (about 20% of Iranian oil goes to China), China's co-operation is critical if the West's plan to force Iran to stop uranium enrichment is to succeed.

Yet it is far from clear that China will go along with such a plan.

When the US Treasury Secretary Timothy Geithner visited Beijing in early January to press Chinese leaders on Iran, his Chinese hosts politely said no.

But given the importance of ties with the West, particularly the US, China cannot completely ignore such pressure and continue business as usual in trading with Iran either.

In understanding how China can protect its interests in this difficult and high-risk situation, we need first to see what drives China's policy toward Iran.

The most obvious is, of course, economic interests.

Double standard

As China's third-largest supplier of crude oil - roughly 500,000 barrels a day - Iran constitutes a critical piece in China's energy security puzzle.

Losing Iran's oil imports would cause an immediate supply shock to China, unless other oil-producing countries, notably Saudi Arabia, stepped in to make up the shortfall.

In addition, Chinese oil companies have signed tens of billions of dollars of contracts for energy exploration and refining with their Iranian counterparts. China risks losing these potentially lucrative deals if it joins in the West-led sanctions.

As a matter of principle, Beijing also objects to the use of sanctions in general.

In the Iranian case, China probably would have gone along had the proposed oil embargo been approved by the United Nations Security Council. Since it is led by the US and Western European nations, China views this initiative as lacking international legitimacy.

In any case, Washington's case against an Iranian nuclear weapons programme has always struck Beijing as another example of American double standards - turning a blind eye to Israel's nuclear arsenal but threatening force against Iran's nuclear programme.

That is why China has taken a middle course so far. It recognizes Iran's right to nuclear enrichment as long as it complies with the rules of the International Atomic Energy Agency (IAEA).

China has supported sanctions against Iran only as a means of compelling Iran to honour its commitments to international law.

Key allies

While economic considerations and an instinctive dislike of sanctions make the Chinese sceptical of supporting the proposed oil embargo against Iran, Beijing must also contend with the costs of irking some of its most important trading partners.

Image copyright AP Image caption China has to consider its ties with Saudi Arabia

Its ties with Washington are, no doubt, far more critical to Chinese national interests than Chinese-Iran relations.

The United States is China's second-largest export market (after the EU). It has plenty of means to make life unpleasant for China if it believes that China deliberately wants to foil its effort to force Iran to stop its nuclear programme.

To complicate matters further, China has to take into account Saudi Arabia's staunch opposition to Iran's nuclear programme.

China has been cultivating ties with Saudi Arabia, its top supplier of oil, for years.

In mid-January, Chinese Premier Wen Jiabao visited Saudi Arabia to further ties. Saudi Arabia is far more critical to China's energy security than Iran is. Thus, China cannot afford to alienate Saudi Arabia because of Iran.

Finally, Beijing's pragmatists know that, given the mounting pressures within Israel to launch a pre-emptive attack against Iran's nuclear facilities, adopting sanctions that can really hurt Iran might be the only alternative to avert a far worse disaster: a war in the Persian Gulf that cuts off the flow of oil through the Straits of Hormuz and causes a global oil shock.

The new middle course Beijing may likely take, albeit with much reluctance, is to protect its interests on multiple fronts.

To avoid completely antagonising Iran, China will maintain its official opposition to proposed oil embargo.

However, if other key oil importers, such as Japan and South Korea, join in the embargo, China will start reducing its imports from Iran under various pretexts as well, so that it will not appear to be a spoiler of the West's plan.

In the meantime, China will extract an iron-clad commitment from Saudi Arabia to supply lost Iranian oil imports.

All this may not spare China the calamitous consequences of a military conflict in the Gulf if Israel loses patience and decides to strike Iran against America's opposition.

But in this dicey nuclear drama, China can do little else.

Minxin Pei is a professor of government at Claremont McKenna College, California, USA