Iran's Trade With China Hit $8.6b in Seven Months, Down 40% YOY

EghtesadOnline: Iran’s commercial exchanges with its biggest trading partner, China, hit $8.66 billion from January to July to register a 40.9% decline compared with the corresponding period of 2019.

News ID: ۷۵۰۸۳۵

31 August 2020

According to data provided by the General Administration of Customs of the People’s Republic of China, Iran’s exports to China stood at $3.54 billion during the period under review, indicating a 61.5% year-on-year drop.

In return, China exported $5.13 billion worth of commodities to Iran to register a 6.3% YOY decrease.

Bilateral trade in June stood at $1.28 billion. Iran’s exports to China accounted for $403.51 million of the sum while imports stood at $876.13 million.

Iran's trade with China in 2019 stood at $23.02 billion to register a decline of 34.3% compared to 2018. It exported $13.43 billion worth of commodities to China last year, 36.3% less compared to the year before. In return, China exported $9.59 billion worth of goods to Iran, down 31.2% YOY.

The decline in Iran-China trade is mainly due to the outbreak of the new coronavirus, but the two sides are taking measures to boost their trade turnover back to its pre-coronavirus levels.

25-Year Strategic Partnership

The Iranian Cabinet approved the final draft of a 25-year roadmap for Iran-China strategic relations earlier in June.

The primary purpose of the plan is to promote bilateral strategic cooperation at regional and international levels using a win-win approach.

"This plan prepares the ground for Iran-China collaboration in key projects and infrastructural development, including the great Belt and Road Initiative. It is an opportunity to attract investment in different economic sectors such as industries, tourism, information technology and communications," President Hassan Rouhani said on June 22.

Belt and Road is a global development strategy promoted by the Chinese government.

Iran prepared the 25-year roadmap for strategic relations with China and Foreign Minister Mohammad Javad Zarif presented it to Chinese authorities during his visit to Beijing in early 2019. The document outlines a vision for long-term cooperation between the two countries in various sectors.

Major Blow to Washington

Iran and China have drafted a major economic and security deal that would clear the way for Chinese investments in Iran, undercutting the United States’ efforts to isolate the Iranian government because of its nuclear program, Brussels-based newspaper New Europe wrote.

The deal is a major blow to Washington’s policy toward Iran. China is Iran’s top trading partner and a key market for Iranian crude oil exports, which have been curtailed by US sanctions.

The partnership was proposed by China’s President Xi Jinping during a 2016 visit to Iran and was approved by the Cabinet of Iranian President Hassan Rouhani’s in June. It would vastly expand Chinese presence in banking, telecommunications, ports, railroads and other projects.

China in return would receive a regular supply of Iranian oil over the next 25 years.

The deal includes proposals for China to build the infrastructure for a 5G telecoms network in Iran. It also envisages military cooperation and calls for joint training and exercises, weapons development and intelligence sharing.

“Two ancient Asian cultures, two partners in the sectors of trade, economy, politics, culture and security with a similar outlook and many mutual bilateral and multilateral interests will consider one another as strategic partners,” the document says.

Iran’s foreign minister said the agreement would be submitted to parliament for final approval.

Iran plans to open a commercial office in China with the aim of focusing on the collaboration of big state-owned companies, according to Gholamhossein Jamili, a member of the board of directors of the Iranian Chamber of Commerce, Industries, Mines and Agriculture.

Similar plans are in the making to open business centers in India, Turkey, Iraq and the UAE.

Iran already has commercial offices in Russia’s Astrakhan and Syria’s Damascus.

Back in June, Iran-China Chamber of Commerce and Industries signed a memorandum of understanding with China Foreign Trade Center on economic cooperation.

The move follows the establishment of a joint arbitration committee between Iran and China back in November 2019 to supervise trade between the two sides.

Tehran Chamber of Commerce, Industries, Mines and Agriculture signed a trilateral memorandum of understanding for cooperation with China Chamber of International Commerce and the Iranian Chamber of Commerce in the North China region of Beijing late last year.

According to the American Enterprise Institute, China invested $26.92 billion in Iran from 2005 to 2019.

Of the total investment, 1.53 billion were made in chemical industries, $11.1 billion in energy, $4.96 billion in metals, $160 million in real estate, $6.92 billion in transport and $2.25 billion in utilities.

The value of China’s overseas investment and construction combined since 2005 exceeds $2 trillion.