Iran-China Q1 Transactions Sink to Lowest in 5 Years
EghtesadOnline: Iran’s commercial exchanges with its leading trading partner, China, stood at $3.2 billion in the first three months of 2021 – the lowest quarterly volume in the past five years – to register a 17% year-on-year decline.
Latest data released by the General Administration of Customs of the People’s Republic of China show Iran’s exports to China totaled $1.47 billion in Q1, indicating an 18.8% YOY decrease.
In return, China exported $1.78 billion worth of commodities to Iran during the same period, indicating a 16.14% decrease compared with the same period of last year.
Trade between the two countries stood at $980 million in March 2021, considerably lower than $1.4 billion in 2019.
Iran’s exports to China amounted to $523 million in March, which figure stood at $667 million in the year-earlier period.
Imports from China amounted to $528 million in March 2021, which amounted to $736.6 million in March 2020.
The two countries’ Q1 2018 trade amounted to $9.97 billion but decreased by 43.13% to $5.6 billion in Q1 2019, after the US unilateral withdrawal from the landmark nuclear agreement and reimposition of sanctions on Iran.
Iran’s commercial exchanges with China stood at $14.91 billion in 2020 to register a 35.3% decline compared with the year before.
As per data provided by China’s customs administration, 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% decrease compared with the same period of the year before.
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 whike imports from China hit $657.2 million.
Trade with China in 2019 stood at $23.02 billion to register a decline of 34.3% compared to 2018. Iran 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.
Reasons Behind the Decline
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.
Decline in Iran’s oil exports to China, as well as the drop in oil prices, has been named as other contributing factors to the decline in Iran-China trade in 2020.
Issues between Hong Kong and China have also impacted trade ties between Iran and China, since many Iranian businesses used to export goods to China through Hong Kong.
The Iranian chapter of Iran-China Chamber of Commerce recently held a virtual meeting titled "Iran-China Commercial Ties in 2020 and Prospects 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 in the meeting, calling on officials to take countermeasures 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 Hariri as saying.
"Despite the outbreak of Covid-19, we have been pursuing the implementation of Iran-China 25-year strategic cooperation plan," Keshavarz-Zadeh said.
He also called for the promotion of Iranian goods in China, stressing that Iranian businesses need 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 Iranian exports. Covid-19 has pushed down the demand for and the prices of these export items.”
According to the Islamic Republic of Iran Customs Administration, Iran traded $18.66 billion worth of goods in the last Iranian year that ended on March 20, 2021.
Iran’s total non-oil trade stood at 145.7 million tons worth $73 billion in the fiscal March 2020-21.
According to Mehdi Mirashrafi, the head of Islamic Republic of Iran Customs Administration, exports accounted for 112 million tons worth $34.52 billion and imports constituted 34.4 million tons worth $38.5 billion. Iran’s main export commodities included gasoline, natural gas, polyethylene, propane and pistachio, such that the latter alone earned $1.2 billion.
The main export destinations were China with 26.6 million tons worth $8.9 billion, Iraq with 25.6 million tons worth $7.3 billion, the UAE with 15.2 million tons worth $4.6 billion, Turkey with 6.3 million tons worth $2.5 billion and Afghanistan with 7 million tons worth $2.2 billion. These five countries imported more than 80 million tons of non-oil goods worth $25.7 billion. Mehr News Agency reported.
China, Iran’s biggest trading partner, accounted for 26% of Iran's total non-oil exports, as 26.58 million tons of non-oil goods worth $8.95 billion were shipped from Iran to China during the period.
Pistachio, nuts, minerals, construction materials, methanol, carpet, iron ore, glassware and fruits were the main types of goods exported from Iran to China in the last fiscal year.
Imports from China totaled 3.54 million tons worth $9.76 billion during the year to March 21, 2021, to account for 10.6% of the total volume of Iran's imports and 25.3% of the total value of imports during the period. Industrial machinery and raw materials, medical equipment, paper, wood, textile, auto parts and sports equipment were Iran's main imports from the South Asian state in the fiscal 2020-21.
“Iran’s foreign trade reduced by 25 million tons due to sanctions and the Covid-19 pandemic,” the IRICA chief said, adding that the country’s trade deficit stood at $4 billion.
Mirashrafi noted that a total of 23.1 million tons of essential goods, including corn, cellphones, rice, soybean meal, oilseeds, wheat and unprocessed oils worth $12 billion were imported during the period under review.
Iran imported 3.5 million tons of essential goods worth $9.7 billion from China, 5 million tons worth $9.6 billion from the UAE, $4.3 billion from Turkey, 2.2 million tons worth $2.1 billion from India and 1.2 million tons worth $1.8 billion from Germany in the year to March 20.
Also known as necessity goods, essential goods are products consumers will buy, regardless of changes in income levels
25-Year Cooperation Agreement
Iranian Foreign Minister Mohammad Javad Zarif and his Chinese counterpart Wang Yi signed the Iran-China comprehensive cooperation document in a meeting in Tehran on March 27, IRNA reported.
The cooperation document had for the first time been discussed in 2015, when Chinese President Xi Jinping visited Iran.
In addition to his Iranian counterpart, Wang met Iran's President Hassan Rouhani and Ali Larijani, the advisor to Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei.
Wang and Zarif held consultations on bilateral and international issues and explored long-term cooperation and implementation of comprehensive strategic partnership in the meeting.
“Relations between the two countries have now reached the level of strategic partnership and China seeks to comprehensively improve relations with Iran,” Wang was quoted as telling Zarif.
“Our relations with Iran will not be affected by the current situation, but will be permanent and strategic,” Wang said ahead of the televised signing ceremony referring to US sanctions.
Larijani said in his meeting with the Chinese FM: “Iran decides independently on its relations with other countries and is not like some countries that change their position with one phone call.”
The accord brings Iran into China’s Belt and Road Initiative, a multi-trillion-dollar infrastructure scheme intended to stretch from East Asia to Europe, according to Reuters.
The project aims to significantly expand China’s economic and political influence, and has raised concerns in the United States.
China has spoken out often against US sanctions on Iran and partly contested them. Zarif called it “a friend for hard times”.
The agreement includes Chinese investments in sectors such as energy and infrastructure.
Rouhani expressed the appreciation of Beijing’s support for Iran’s position on its 2015 nuclear deal with world powers, in which it agreed to curb its nuclear program in return for the lifting of international sanctions.
“Cooperation between the two countries is very important for the implementation of the nuclear accord and the fulfilment of obligations by European countries,” Rouhani said.
US President Joe Biden has sought to revive talks with Iran on the nuclear deal abandoned in 2018 by his predecessor, Donald Trump, in 2018. Tehran wants the sanctions imposed by Trump to be removed before any negotiations resume.
“Under the new administration, the Americans want to reconsider their policy and return to the nuclear accord, and China welcomes their move,” Wang said.
He also promised that China would provide more coronavirus vaccines to Iran, the Middle Eastern country worst-hit by the pandemic.
Iranian Foreign Ministry Spokesman Saeed Khatibzadeh said the agreement was a “roadmap” for trade, economic and transportation cooperation, with a special focus on both countries’ private sectors.
“China is willing to invest a total of $400 billion in Iran’s different economic sectors as part of this 25-year deal, some $80 billion of which are to be in the mining sector,” according to the head of Mines and Mineral Industries Commission of Iran Chamber of Commerce, Industries, Mines and Agriculture.
“The significance of this amount becomes even more prominent when we take into account that over the last 95 years and since the reign of Reza Shah [the first Pahlavi monarch] up until now, investments made in Iran’s mining and mineral industries amount to no more than $50 billion,” Bahram Shakouri was also quoted as saying by ILNA.
The official noted that absorbing this amount of Chinese investments can generate a large number of jobs and expand the country’s production and exports.
“This can also affect developments in other fields such as infrastructures, transportation and ports,” he added.
According to the American Enterprise Institute, China invested $26.92 billion in Iran from 2005 to 2019.
Of the total investment, $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.