Iran's Trade With China Could Top $60 Billion Without US Sanctions

If United States’ sanctions are lifted, Iran’s trade with China could reach $60 billion, the head of the Tehran-Beijing chamber of commerce has said in Tehran.

Majid-Reza Hariri told the Iranian Labour News Agency (ILNA) on Monday that US sanctions are preventing the implementation of a 25-year strategic cooperation agreement inked between Iran and China last year.

Hariri in previous interviews published in Iranian media has implicitly called for a nuclear agreement to be concluded with the West, emphasizing that Iran’s economy cannot emerge from its current crisis while US sanctions are in place, hampering oil exports and banking ties with the world.

The well-known businessman presiding over the Iran-China Chamber of Commerce in Tehran said as along as US sanctions are not removed, Tehran’s economic ties with Beijing cannot improve beyond the current point. He estimated that bilateral trade is not less than $30 billion, which could double in the event of a nuclear agreement with Washington.

Since former US president Donald Trump abandoned the Iran nuclear deal known as JCPOA in 2018, Tehran has been emphasizing an Eastern-oriented foreign policy it dubs as ‘Looking East’, probably in an attempt to show Washington that it has alternatives and can draw closer to Moscow and Beijing.

Hariri explained that although China is Iran’s biggest trade partner, 92 percent of what it buys are oil and minerals, not finished goods. He underlined the fact that global inflation, especially in commodities, is rising and Iran’s trade with China can see an uptick in terms of value but not volume.

In case of other trading partners, such as Iraq and Afghanistan, 75-80 percent of Iran’s exports are raw materials.

Iran in recent months has presented figures saying its exports are increasing. But Hariri implied that part of this rise is simply due to global rise in prices, not more exports.

Hariri explained that preparatory work has begun to work out details of cooperation with China according to the 25-year agreement, but besides the impediment of US sanctions, there are issues of securing credit and financing, which have to be resolved regarding each area of cooperation.

One of the processes in expanding trade ties with Beijing is establishing Iranian representative offices in China, which Hariri said is work in progress. Plans are to open four chamber of commerce branches, but he did not say in which Chinese cities. Also, a permanent exhibit of Iranian goods is planned to be set up in China.

Hariri explained that the importance of trade representation is to boost non-oil exports, preferably manufactured goods to China.

Although the Islamic government in Tehran often tries to highlight what it says is close ties with China, Beijing has established wide-ranging commercial relations with other regional countries, including Saudi Arabia and Israel that are the Islamic Republic of Iran’s adversaries.

Saudi Arabia exports 25 percent of its oil to China and recently announced it is willing to accept the Chinese currency as payment for oil, as relations have cooled with the Biden Administration. Already Saudi Arabia is China’s biggest trade partner in the region.