Business Leader Says China Pays For Iran’s Oil With Goods

The Chairman of the Iran-China Chamber of Commerce has said that Iran had “imported goods in return for all the oil that we have sold China.”

Majid-Reza Hariri told Mehr news agency in an interview published Monday that China owes no money to Iran for oil imports but does hold Iranian assets.

Hariri argued there had been confusion over $21 billion in Iranian assets that some reports have suggested are in China due to Chinese fears of punitive United States action against anyone buying Iranian oil or interacting with Iran’s financial system.

The business leader said that Iranian money in China consisted of Iran's reserves – cash, bonds, and stocks − that had been transferred to China years earlier in fear of confiscation.

"After 2007 there was a possibility of confiscation of Iran's currency reserves in international banks, particularly European banks, because of legal suits brought against Iran by some European countries or the United States," Hariri explained.

Iran is known to have moved hard currency reserves and bonds to China from banks in Britain, Germany, France and Switzerland to protect them from being confiscated. Washington this week announced it will seize $7 billon of Afghan reserves held in the US.

Hariri said India, like China, had exported goods to Iran as an alternative to dollar payments. These, he pointed out, had included medicine and pharmaceutical ingredients. But other countries, he said, including South Korea − where over $7 billion of Iranian assets are frozen in fear of US action − and Japan had refused payment in kind.

With the administration of President Joe Biden continuing ‘maximum pressure’ sanctions, Washington said in January it would waive any threat of sanctions on South Korea only with “everything” agreed in Vienna on reviving the JCPOA, where talks are reportedly in their final stages..

Billions of dollars of Iranian money is frozen abroad in fear of US sanctions, including in South Korea, Japan, China, Europe, India, and Iraq. The semi-official Iranian Students News Agency (ISNA) estimated in November the total at $50 billion, with $8 billion in South Korea, $3 billion in Japan, and $6 billion in Iraq.

Some countries such as Iraq to which Iran exports electricity and gas but not oil, freeze the money so the volume of frozen money is growing in their banks. Iraq now owes Iran around $7 billion for gas and electricity to Iran.

Other countries such as South Korea, Japan, and India no longer import crude oil from Iran so the assets frozen in their banks date back to before full US oil sanctions went into effect in May 2019, when Washington offered eight countries waivers to import limited quantities of Iranian oil.

China continued buying oil from Iran even after the US imposed full sanctions. The volume was less than 200,000 per day from May 2019 until late 2020, when it increased reaching to more than 500,000 in 2021 and even more by December-January.

The Biden Administration reportedly does not attempt to vigorously enforce the sanctions, as Chinese importers believe the risk of violating the sanctions are relatively low.