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Trade With China Under Scrutiny
Domestic Economy

Trade With China Under Scrutiny

The Iranian people and economists are of the general opinion that China benefited most from the Iranian market over the past years as the European companies and traders walked away following imposition of economic sanctions against Iran by the West over its nuclear energy program.
According to data released by Chinese General Administration of Customs, trade between Iran and China amounted to $47.5 billion in 2014, indicating 36 percent growth compared to the previous year’s trade turnover of $35 billion.  China’s share in Iran’s foreign trade has grown from only about 5 percent in 2001 to nearly 50 percent, according to the Persian daily, Taadol.
In an interview with four officials and experts, Persian daily Ta’aadol  has asked them about the short and long-term effects of China’s monopoly over Iran’s economy.

 Lausanne Deal to Check China’s Share
Head of Iran’s Supreme Council for Imports, Hossein Barkhordar believes that the nuclear agreement reached between Iran and the P5+1 (the five permanent members of UN Security Council plus Germany) in the Swiss city of Lausanne and a subsequent removal of sanctions will lead to a competitive atmosphere wherein the Chinese and the Europeans will have to compete to gain a better leverage in the Iranian market.
“Due to the sanctions, we had no choice but to do business with countries that bought oil from us. On the other hand, Iranian businessmen had limited options while selecting countries to carry out their business activities. However, I believe the European firms will return to the Iranian markets once a final agreement has been reached in nuclear negotiations. The new situation would drive the Chinese into a serious competition with western contenders,” he said.
He noted that China’s leverage in the Iranian market is likely to reduce unless the quality and price of Chinese products improve.

  China to Lose Grip
Head of Lorestan Province Chamber of Commerce, Industry, Mines and Agriculture, Hossein Selah-Varzi is of the opinion that a lifting of sanctions on Iran, anticipated in the Lausanne nuclear deal, will enable Iran to establish “more logical and rational” ties with other countries, threatening China’s grip on the Iranian market.
“Trade between Iran and China has been to a large extent influenced by the sanctions. Based on various statistics on the volume of trade between the two countries, bilateral trade has never been balanced as China’s exports to Iran far exceed its imports,” he said, adding  that China would be forced to adopt new strategies to maintain its position in Iran’s economy, if and when the sanctions are lifted.  

  Opportunism
Head of Iran-Italy Joint Chamber of Commerce, Ahmad Pour-Fallah says a possible nuclear deal will end what he called “China’s opportunism” in the Iranian market.
“With the sanctions removed, Iran would be able to import equipment and machinery from more advanced countries such as England and Germany. In that case, the Chinese dominance in the market is likely to reduce,” he said.
He however acknowledged that trade with China helped Iran meet its demands in times of difficulty, noting that the blame for bulk import of low quality Chinese products is also partly shared by the Iranian importers who put profit above all else.  

  Ties Not Driven by Sanctions
Majid Reza Hariri, a member of Tehran Chamber of Commerce, Industries, Mines and Agriculture believes that the growth in trade between Iran and China is not linked to the sanctions, noting that China would still be Iran’s leading trade partner even if the economy was not under sanctions.
“China’s trade exchange with the world surpassed $4,600 billion in 2014. China’s trade with Iran during the same period was only about $50 billion, indicating that Iran’s share in China’s total foreign trade has been trivial. Iran’s trade with China was never driven by the sanctions as China is the world’s second biggest economy,” he said, adding that the Chinese and Iranian economies complement each other, with China being the biggest consumer of Iranian oil and Iran being China’s main oil supplier.

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