Chinese companies can weather the first wave of unilateral US sanctions effective on Tuesday by expanding the use of renminbi (RMB) in their transactions with Middle East countries, Chinese observers said on Monday.
The US intends to fully enforce sanctions against Iran, US Secretary of State Mike Pompeo said on Sunday.
The sanctions target Iran’s purchases of US dollars, its trade in gold and precious metals, and its dealings with metals, coal and industrial software.
The sanctions will hurt the Iranian economy and further devalue the Iranian rial, but exert little direct impact on Chinese firms operating in Iran, Chinese experts told the Global Times on Monday.
“Limiting Iran’s purchases of US dollars and gold will further eliminate options in support of Iran’s currency, and worsen the domestic Iranian shortage on the foreign exchange,” said Tian Wenlin, a research fellow in Middle Eastern studies at the China Institute of Contemporary International Relations in Beijing.
The sanctions effectively cut off remittance routes so that dollar-denominated international transactions, including those between China and Iran, would be affected, said Hua Liming, former Chinese ambassador to Iran.
Chinese firms can bypass the blockade by expanding renminbi payments, which trend in staple products dominated China-Iran trade before the sanctions.
A last wave of US sanctions will hit Iran on Nov. 4. Those sanctions target Iran’s lucrative energy sector, petroleum-related transactions and business with the Central Bank of Iran.
Chinese firms will not be seriously affected until then, Tian said.
China is Iran’s biggest crude oil customer.
China imported 39 million tons of crude oil in May, according to the General Administration of Customs, and the total crude oil China imported from January to May this year increased by 8.2% compared to the same period of last year.
The US sanctions against Iran and the ZTE case have rattled Chinese firms with business in Iran, Tian said, even though losses have not yet hit them.
China’s trade with Iran grew to $37.2 billion in 2017, a 19% increase over 2016, according to Chinese customs data.
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