The Optimal Strategy of the Islamic Republic of Iran in managing Trade Relations with China: Game Theory Approach

This article examines the optimal strategy of the Islamic Republic of Iran in managing trade relations with China and answers this question: considering the high level of trade relations between the United States and China and the increase in conflicts and the emergence of an economic war between these two countries, what will be the optimal strategy of Iran in managing economic relations with China. The main hypothesis of the research is that: the decline of US economic power and the rise of China's economic power and in the same time emergence of the US-China trade war has provided a very good opportunity for Iran to develop trade relations with China on order to neutralize the pressure of US sanctions. Using the game theory method, the research models the Iran-China trade relationship and analyzes Iran's optimal strategy. The results show that the best strategy of Iran is development of trade relations with China with the aim of gaining concessions from the West, as well as improving the country's economic situation and circumventing sanctions and for the china with the aim of gaining concessions from the West and also expanding its soft power in the West Asian region. If one of the parties has a strategy of severing cooperation in order to satisfy the West, the other party will choose such a strategy and the game will reach a new balance in which the utility of both countries will be very low.