China Has Good Reasons to Defend Iran Nuclear Deal

EghtesadOnline: China is calling on the United States to preserve the Iran nuclear deal reached in 2015, after US President Donald Trump threatened to tear up the agreement.

News ID: ۷۷۹۸۴۳

23 October 2017

In a speech on Friday, Trump refused to certify the Joint Comprehensive Plan of Action, accusing Tehran of committing “multiple violations” of the deal despite international inspectors saying it had complied with it.

The president’s actions threaten the accord to ease sanctions on Iran, which was negotiated by the US, China, France, Germany, Russia and the United Kingdom to curb Tehran’s nuclear program, though the EU says the US cannot unilaterally repeal the deal.

China has considerable stakes in Iran. The two countries have economic, trade and energy ties, with China relying on oil imports from Iran while Tehran looks to China for investment, particularly stemming from its sprawling Belt and Road trade and infrastructure plan, according to Financial Tribune.

Hong Kong’s newspaper South China Morning Post has listed some of China’s main economic links to Iran.

Bilateral Trade

China has become Iran’s top trading partner, thanks to its sizable oil and gas exports. China imported 3.34 million tons of oil from Iran in August–the highest monthly level since 2006.

During a trip to Iran after the 2015 nuclear deal was signed, Chinese President Xi Jinping agreed on a wide-ranging, 25-year plan to increase bilateral trade with Iran by over tenfold to $600 billion in the next decade.

Iran is a major food importer, while oil is its top export.

“The China-Iran friendship ... has stood the test of the vicissitudes of the international landscape,” Xi was quoted as saying at the time.

Energy Projects

Chinese companies have financed major energy projects in Iran, including developing huge oilfields in Yadavaran and North Azadegan.

In July, state-owned China National Petroleum Corp took a 30% stake in a project to develop South Pars in Iran–the largest natural gas field in the world.

Beijing also signed a $3 billion deal to help upgrade Iran’s oil refineries in January. That includes a contract between China Petroleum and Chemical Corp, or Sinopec, and the National Iranian Oil Company to expand Iran’s major Abadan oil refinery, which is more than a century old.

Belt and Road Projects

Located at a pivotal point on China’s “Belt and Road Initiative”, Iran has become a major part of the expansive infrastructure investment plan. One key project is a $2.56 billion high-speed railroad from Tehran to the eastern city of Mashhad, with China providing a $1.6 billion loan to fund the electrification of the 926-km line. That was the first foreign-backed project in Iran after the 2015 nuclear deal was signed.

Export-Import Bank of China said it had financed some 26 projects in Iran, providing around $8.5 billion in loans.

Chinese companies have been involved in highway building, mining and steel production in the country.

And China Export and Credit Insurance Corp, or Sinosure, also signed a memorandum of understanding with Iran in May to help Chinese companies invest in Iranian projects.