Iran, China Working to Remove Banking Hurdles

EghtesadOnline: Minister of Economic Affairs and Finance Ali Tayyebnia met with Chairman of the Chinese National Development and Reform Commission He Lifeng in Tehran to discuss various dimensions of Iran-China economic ties, especially those concerning banking ties.

News ID: ۷۷۸۴۱۳

15 August 2017

"In our meeting, we talked about ties between our banks and the Chinese official promised to follow up on the matter so that banking ties between Iranian and Chinese lenders would soon be reestablished," Tayyebnia was quoted as saying by IBENA.

The Chinese official, who has assumed the chairmanship of NDRC from February, was in Tehran to attend the inauguration ceremony of President Hassan Rouhani on Saturday.

According to NDRC, the organization's main functions are to formulate and implement strategies of national economic and social development, monitor macroeconomic and social development trends, make forecasts, plan the layout of key construction projects and push forward strategic economic restructuring, Financial Tribune reported.

According to Tayyebnia, he also discussed Chinese finance for Iranian projects and referred to the finance for the project to electrify a 926-km railroad between Tehran and the eastern city of Mashhad as a successful deal.

"The project to develop and sustain the refinery in Abadan will most probably be the second project to receive major finance from China," he added.

The financing contract for the Tehran-Mashhad railroad, considered to be the first such deal after the removal of international nuclear sanctions against Iran, was signed in Tehran on July 26 between Exim Bank of China and Iran’s Bank of Industry and Mine.

As per the agreement, China will extend a $1.5-billion loan for the project, providing 88% of the total finance.

As the economy minister said, Iran has continuously introduced a variety of Iranian projects to China, which have been welcomed and will receive finance in the foreseeable future.

The Asian Infrastructure Investment Bank, in which Iran is also a founding and shareholding member, is also reportedly considering financing Iranian projects.

Correspondent Banking Relations

The Minister of Industries, Mines and Agriculture also met with He Lifeng, and spoke to him about alleviating banking hurdles.

"When international sanctions were in place, we had correspondent banking relations with only one Chinese bank and that remains the case today," Mohammad Reza Nematzadeh was also quoted as saying by Mehr News Agency on the sidelines of the meeting.

Therefore, he added, Iranian exporters and importers are still bereft of a direct channel with their Chinese counterparts and "that is why we hope that negotiations held by the economy minister and me will lead to the reestablishment of correspondent relations".

The minister also referred to difficulties faced by exporters of petrochemical products to China who could not transfer their profits, saying that negotiations are expected to help remedy the situation.

Iranian petrochemical exporters faced hurdles in collecting revenues for their exports to China, but as Governor of the Central Bank of Iran Valiollah Seif said in early June, the problem is not bank-related and is due to Chinese lenders demanding an official verification of certificates of origin from their Iranian counterparts while they accepted the same certificates in the past.

Possible Account Closures in China

In recent days, a late night television program interviewed several Iranian entrepreneurs in China who claimed that their bank accounts in the East Asian nation are being closed by three lenders, namely Agricultural Bank of China, Industrial and Commercial Bank of China and China Merchants Bank.

"I have two bank accounts in China, one of which has been closed without any reasons given," one distraught trader said, while another claimed that three of his accounts have been closed and his subsequent trips to China led him nowhere.

However, these are individual accounts and the news is yet to be officially confirmed.

Contacted by Financial Tribune, the Iran-China Chamber of Commerce and Industries, the Central Bank of Iran, the Economy Ministry and the Organization for Investment, Economic and Technical Assistance of Iran said they have received no reports to this effect.