EghtesadOnline: Since US President Donald Trump withdrew the United States from the Iran nuclear deal in May, the country has been negotiating with other nations to keep its oil-dependent economy alive. However, China is not expected to toe the US line.
According to CNBC, the need for economic ties with the rest of the world increased when the Trump administration announced planned sanctions on Iranian oil exports starting in November. For Iran, one nation matters more than any other to its oil economy and it is also Trump's largest global trade rival: China.
European companies have been winding down their purchases of Iranian oil, and the threat of sanctions on Iranian business has pushed out banks, many of which had paid severe fines for sanction violations in the past.
But China, already the biggest buyer of Iranian oil, is not expected to heed US demands. In fact, the Iranian oil sanctions could give China leverage in stalled trade negotiations with the United States, according to Financial Tribune.
“Now that the trade relationship is in jeopardy, why would they do that?” Derek Scissors, resident scholar of the American Enterprise Institute, said of China's pulling back on purchases of Iranian oil.
“If we tell the Chinese, ‘Oh, we will cancel our pending tariffs as long as you stick to the Iran sanctions,’ they will do it in a second.”
China, the world’s top crude-oil buyer, imported around 718,000 barrels a day on average from Iran between January and May of this year, according to official Chinese customs data—equivalent to more than a quarter of Iran’s oil exports.
China increased its imports of Iranian oil by 9.3% during the same period from the year before and is not expected to slow down purchases anytime soon.
The US expects China to buy even more oil once the US sanctions take place in early November, as reported recently by The Wall Street Journal.
In refusing to comply with US sanctions, the world’s second-largest economy will dull the sanctions’ fiscal impact, but China’s current position on Iranian oil sanctions is consistent with its historical approach.
“The Chinese position in general has been that they will honor UN sanctions and they are reluctant to recede to bilateral sanctions,” said senior fellow David Dollar of The John L. Thornton China Center at the Brookings Institution.
Dollar said the Chinese have been averse to US sanctions—bilateral and unilateral—in the past, usually choosing their own business interests over cooperation.