Iran, China Agree to Deal in Local Currencies

EghtesadOnline: During President Hassan Rouhani's visit to China, the two countries signed several agreements to boost trade and financial ties, including an agreement to use their respective currencies.

News ID: ۷۴۵۴۴۹

12 June 2018

Speaking to IRNA on Sunday, Economy Minister Masoud Karbasian, who accompanied President Rouhani during the visit, said one of the agreements had been reached between his ministry and China Infrastructure Development Organization to use the two countries' financial resources for investment and bilateral trade.

According to Karbasian, as per the agreement, the two country's trade ties have been devised within the framework of the Belt and Road initiative, which specifies the share of each country in the plan.

The initiative promotes a vision of expanding links among Asia, Africa and Europe to revive the ancient Silk Road underpinned by billions of dollars in infrastructure investment, according to Financial Tribune.

China's Finance Minister Xiao Jie has in the past underscored Iran's strategic role in China's New Silk Road plan, noting that Iran can be a party for fulfilling this vision.

Regional Cooperation

President Rouhani traveled to China this week to take part in the 18th summit of Shanghai Cooperation Organization.

Jointly led by Russia and China, SCO was launched in 2001 to address regional security, political and economic challenges. The eight-member grouping also includes Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan and, since last year, Pakistan and India.

Iran is an observer member and seeks full membership.

Prior to Rouhani's visit, Governor of the Central Bank of Iran Valiollah Seif also said the prospect of Iran and China using local currencies in bilateral trade will eliminate difficulties arising from the US decision to quit the nuclear deal Iran signed with world powers in 2015.

Iran intends to strike monetary agreements with several nations as part of its efforts to ditch the US dollar in its dealings.

The country currently has a total of 10 "memoranda of understanding and protocols" pertaining to monetary agreements with other countries, according to Samad Karimi, the Central Bank of Iran's head of Exports Department.

In April, Tehran announced it will publish all its official financial reports in euro instead of the US dollar to encourage a switch to euros among state economic agencies.

US President Donald Trump pulled out of the international nuclear deal with Iran—known as the Joint Comprehensive Plan of Action—on May 8 and said he would reimpose sanctions within 180 days, prompting several European companies to announce they would end business with Tehran before the Nov. 4 deadline.

European powers have been scrambling to salvage the agreement. China’s adeptness at doing business with Iran through state-owned companies not exposed to the American financial systems is expected by some to make Beijing the biggest beneficiary of Trump’s move to withdraw from JCPOA.

Karbasian added that another document on the expansion of bilateral scientific and technical cooperation was signed in the presence of the two countries' leaders.

Two other bilateral agreements, he said, pertained to stock exchange cooperation and fighting illegal drugs and organized crime.

"In order to increase trade volume between the two countries, talks were held on enhancing banking, oil and petrochemical sectors," Karbasian said.

At the annual summit of the SCO this weekend, China’s president warned against unilateralism and trade protectionism as he, Russian President Vladimir Putin and Central Asian leaders used the regional meeting to criticize US policy.

Xi and Putin and others pledged their support for JCPOA.

“China is willing to work with Russia and other countries to preserve JCPOA,” Xi said.