Iranian Trade With China Is Up, but So Is Political Risk

The Iranian port of Chabahar has become a focal point of Sino-Iranian trade.

“China’s imports from Iran… grew by 26 percent.”

Between 2018 and the end of 2020, Iran’s foreign reserves shrunk from $122 billion to just $4 billion.  However, its foreign reserves have since rebounded and are expected to be up to $43 billion by the end of 2022 thanks to record oil prices and a diplomatic environment more conducive to Iranian oil sales.  According to Chinese customs authorities cited in the excerpted article from Iranian financial website Bourse24.ir, a healthy chunk of this increase in foreign reserves appears to be due to increasing trade with China.  However, the dollar-enumerated trade can be deceptive. Iran often sells oil to China at a steep discount to avoid any questions about sanctions violations, especially as the Islamic Revolutionary Guard Corps controls Iran’s energy sector and has a controlling interest in many Iranian shipping companies.  China also historically dumps cheaper manufactured goods in other states to the detriment of those countries’ own manufacturing base.  While Iran and China have signaled a mutual desire to increase trade and perhaps even military relations, any willingness by the Iranian government to allow greater Chinese exports into Iran would have high potential costs.  Chinese competition with Iran’s manpower-centric sectors, such as textiles and construction, could create a nationalist backlash against both China and Chinese nationals who might be visiting or working in Iran.  China and Iran might celebrate the current increase in trade, but further expansion carries risks.

Source:

“Tejarat-e Iran va Chin ba Rashad 18 dar sadi az 6 Milyard Dollar Gozasht (Trade between Iran and China Exceeds $6 billion with 18 Percent Growth),” Bourse24.ir (Iranian financial website), 25 June 2022. https://www.bourse24.ir/news/247196

…The latest statistics released by Chinese customs show that the country’s trade with Iran in the first five months of this year has grown 18 percent compared to the same period a year ago, reach $6.472 billion…. China’s imports from Iran in the first five months of 2022 grew by 26 percent compared to the same period a year ago, reaching $3.192 billion. China imported $2.535 million worth of good from Iran during the same period last year. China’s exports to Iran from January until April this year also grew 11 percent to $3.280 billion. China exported $2.946 billion worth of good to Iran between January and May last year.

Image Information:

Image: The Iranian port of Chabahar has become a focal point of Sino-Iranian trade
Source: Iran Kala Television
https://cdn.iktv.ir/images/thumbnail/20200510/11042013_xl.jpg