Transactions With China Reach $14.9b in 2020, Down 35% YOY

EghtesadOnline: Iran’s commercial exchanges with top trading partner, China, stood at $14.91 billion in 2020 to register a 35.3% decline compared with the year before.

News ID: ۷۸۵۸۹۹

04 February 2021

As per data provided by the General Administration of Customs of the People’s Republic of China, Iran’s exports to China totaled $6.4 billion, indicating a 52.4% year-on-year decrease.

In return, China exported $8.51 billion worth of commodities to Iran in 2020, indicating an 11.3% decline compared with the same period of last year.

Trade between the two countries stood at $1.39 billion in December 2020, down from $1.7 billion in December 2019.

Iran’s exports to China amounted to $733.3 million during the month, while imports from China hit $657.2 million.

Bilateral 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, 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.

Contributing Factors to Decline

Decline in Iran’s petroleum exports to China and the drop in oil prices are key factors contributing to the decline in Iran-China trade in 2020.

Issues between Hong Kong and China are also referred to as another main reason behind the decline in trade ties between Iran and China, since many Iranian businesses used to export goods to China through Hong Kong.

The Iranian side of Iran-China Chamber of Commerce last week held a virtual meeting titled "Iran-China Commercial Ties in 2020 and the Prospect of Economic Relations in 2021", in the presence of Iran's Ambassador to China Mohammad Keshavarz-Zadeh.

“The government needs to be more determined about boosting trade ties with China,” Majid Reza Hariri, the head of the joint chamber, said at the meeting, calling on officials to take counter measures against the negative atmosphere surrounding the two countries' businesses.

"There is a huge market for Iran-made agricultural products, dairy products and seafood … This is a great opportunity for our country," the chamber’s website quoted him as saying.

Keshavarz-Zadeh noted that despite the outbreak of Covid-19, Iran is pursuing the implementation of the 25-year strategic cooperation plan with China.

He also called for the promotion of Iranian goods in China, advising Iranian businesses to provide detailed information about Iranian goods, if they are planning to export to China.

“Global trade has dropped by 30% following the outbreak of coronavirus and Iran was no exception. Seven countries, including China, Iraq, Afghanistan, the UAE and India, account for 75% of our foreign trade; over 50% of Iran’s non-oil exports are headed to Iraq and China, all indicative of our export vulnerability," Hariri said recently.

“Natural gas, gas condensates, petrochemicals and unprocessed minerals make up 70% of Iran's exports. Covid-19 has pushed down demand for and the prices of these exporting items. For our production lines to be operational, about $45 billion worth of essential goods, pharmaceuticals and medical equipment need to be imported. Given the restrictions placed on oil sales, this figure appears to be unreachable.”

Pedram Soltani, a member of Iran Chamber of Commerce, Industries, Mines and Agriculture board of directors, noted that Iran has to prepare for a 30% decline in export value in the current Iranian year (March 2010-21) compared with last year due to the impacts of the coronavirus pandemic on national and international trade.

“Under the current circumstances, it is estimated that that the country’s exports will fall between $10 billion and $12 billion compared with last year. The main products that will experience a plunge due to the pandemic are petrochemicals, steel, mineral products, tiles, ceramics and nuts,” he was quoted as saying by ISNA.

Soltani, a former deputy head of ICCIMA, added that China is most likely the least affected economy by the pandemic and since it is Iran’s top trading partner, exports to this country will hopefully remain unaffected.

“Yet, the outbreak of Covid-19 as well as the nosedive in oil prices will make Iraq, our second biggest export destination, very cautious and we will be facing limitations on the commodities we can export to the neighboring country,” he said.

Soltani pointed out that based on World Trade Organization’s prediction, world trade will see a 13-32% plunge in 2020 (best- and worst-case scenarios), noting that it is likely that the economic crisis awaiting the world now will be more intense than the one experienced in 2008.

25-Year Strategic Partnership

Tehran has prepared a 25-year roadmap for strategic ties with Beijing, which is yet to be finalized and approved by both countries.

The plan outlines a vision for long-term cooperation between Iran and China in various sectors.

The Iranian Cabinet approved the final draft of the roadmap earlier in June after Foreign Minister Mohammad Javad Zarif presented the document to Chinese authorities during his visit to Beijing in early 2019.

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 industry, tourism, information technology and communications," President Hassan Rouhani said on June 22.

The roadmap outlines a vision for long-term cooperation between the two countries in various sectors.

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

About $27b of Investments From 2005 to 2019

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

Of the total investment volume, $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.

Although Iran-China trade has fallen recently due to the outbreak of coronavirus, the two sides are taking all measures to boost their trade turnover back to its pre-corona levels.

IRICA’s Latest Trade Stats

Latest data provided by Mehdi Mirashrafi, the head of the Islamic Republic of Iran Customs Administration, show Iran’s foreign trade, excluding crude oil exports, stood at 122.8 million tons worth $58.7 billion in the 10-month period leading to Jan. 19.

Iran’s exports accounted for 94.54 million tons worth $28.06 billion and imports reached 28.24 million tons worth $30.63 billion.

Compared with the corresponding period of last year, exports registered a 17.7% and 20% decline in weight and value respectively.

Imports saw a 2% and 15.5% decline in weight and value respectively year-on-year, Mirashrafi was quoted as saying by ISNA.

The main export destinations over the period included China with 22.8 million tons of non-oil goods worth $7.2 billion, Iraq with 22.3 million tons worth $6.3 billion, the UAE with 12.8 million tons worth $3.7 billion, Turkey with 5.7 million tons worth $2 billion and Afghanistan with 5.8 million tons worth $1.9 billion.

“These five countries imported an aggregate of 69.5 million tons of non-oil goods worth $21.3 billion from Iran, which account for 73.5% of the weight and 76% of the value of Iran’s overall exports over the period under review,” the IRICA chief.

Major exporters to Iran were again China with 2.9 million tons worth $7.9 billion, the UAE with 4.1 million tons worth $7.4 billion, Turkey with 4 million tons worth $3.4 billion, India with 1.9 million tons worth $1.8 billion and Germany with 966,000 tons of goods worth $1.4 billion.

“These five countries exported an aggregate of 13.9 million tons of goods worth $21.9 billion to Iran, which account for 49% of the weight and 71.6% of the value of Iran’s total imports over the period,” he added.

Mirashrafi said a total of 5.8 million tons of cargo were transited through the country over the period, indicating a 9.5% decline YOY.

Noting that imports of essential goods accounted for 19.5 million tons of total imports (25 essential items constituted 69% of imports in terms of weight), the official said, “A total of 8.1 million tons of essential goods worth $9.9 billion were imported from Nov.1, 2020, to Jan. 19, i.e. 101,000 tons per day.”