This is part of Beijing's drive to secure oil and natural gas resources in the Middle East and Africa as U.S. influences wanes.
China's clout in Iraq, along with other parts of the Middle East, including Saudi Arabia, is bound to increase as the Americans' diminishes.
With U.S. domestic production expected to soar from vast shale oil deposits, Washington may not be too upset at that prospect since ultimately it will mean withdrawing costly military forces from the Middle East, as Britain did in 1971.
If that happens, China will find itself with vulnerable maritime routes for its energy imports, just as the Americans have for the last three decades. Saudi Arabia already ships more oil eastward to Asia than it does to the West.
China's interest in Iraq's energy resources has largely gone unnoticed because of its high-profile activities in Africa and Iran.
But, cautioned analyst J. Michael Cole, "if the current trends continue, Iraq could become the world's next 'oil superpower,' with China, not the West, acting as both Iraq's main partner and top beneficiary of its rich resources."
Iraq's production is rising significantly, driven by international investment. This is currently 2.9 million barrels per day but that's expected to double by 2020.
"By the end of the decade, production capacity will likely be in the 6 million-8 million bpd range," the International Energy Agency noted Oct. 9.
"There's a new trade axis being formed between Baghdad and Beijing," observed IEA Chief Economist Fatih Birol.
China's move into Iraq, which has reserves of 143.1 billion barrels of oil and 112 trillion cubic feet of natural gas, has only gone into high gear in the last 3-4 years.
Beijing bought itself a lot of goodwill in 2010 by forgiving about 80 percent of Iraq's $8.5 billion debt to China.
As of 2010, China had committed to five major oil investments in Iraq. The China National Petroleum Corp., China's largest oil producer, is seeking a stake in the 17 billion barrel Rumaila field in southern Iraq, the country's largest.
PetroChina, a CNPC subsidiary, has a 37.5 percent stake in another major southern field, Halfaya, which has reserves of 4.95 billion barrels.
China Petroleum and Engineering Corp. built three crude processors in Halfaya under a $174 million contract before the field began commercial production in July. It aims to produce 300,000 barrels per day by 2013.
The Chinese, flush with cash unlike their competitors, are interested in acquiring Total's stake in Halfaya if Baghdad insists the French giant surrender it for signing "illegal" exploration deals with Iraq's independence-minded Kurdish enclave.
"While the majority of Iraqi oil deals in the post-Saddam Hussein era were awarded to Western firms" in 2009-10 "the Western shift to a more amenable and independent oil-rich Kurdish region in the north amid disenchantment with southern Iraq is creating a vacuum that China has found hard to resist," observed Cole, a former officer with Canada's Security Intelligence Service.
"Even more than Russia, a traditional player in Iraq during the Soviet era, China has the capital that Baghdad is desperately seeking to build its oil and gas infrastructure, while Iraq has crude potentials that are alluring to a China that seeks to diversify its energy sources," Cole wrote in The Diplomat in November.
Beijing's taking risks on this, since Iraq remains highly volatile amid a continuing jihadist insurgency and fears of renewed bloodletting between majority Shiites and minority Sunnis.
Iraq's vast energy infrastructure is highly vulnerable to attack, as it has been since the U.S. invasion of 2003.
Moreover, as China's investments in the Middle East expand, Beijing will increasingly have to focus on protecting its energy shipments through the Persian Gulf and the Indian Ocean en route to East Asia.
This has already been seen in growing Chinese naval activity in the Indian Ocean, where Beijing will have to compete with India, Asia's other booming economy that's also dependent on energy imports.
"Given the high stakes for the region, Beijing's engagement of Iraq over the next decade will deserve close scrutiny," Cole said.