1. Bulatov, international observer

The history of trade relations between Iran and China dates back to the first contact between the two governments in 140 BC. In the last century, the new economic relationship between the two countries was accompanied by ups and downs. Trade turnover has been growing steadily in recent years. Relations between Tehran and Beijing have been upgraded to the level of a comprehensive strategic partnership, including the fields of economics, politics, security, military-technical cooperation, as well as culture and science

According to President Ebrahim Raisi, Iran and China are “friends in difficult circumstances.” From Tehran’s point of view, the “look east” policy, cooperation with Asia, relations with China within the framework of the Belt and Road Initiative, Iran’s full membership in the SCO, and rapprochement with BRICS contribute to trade and economic cooperation between Iran and China. Tehran is counting on China’s help to ease the impact of Western sanctions on its economy.

As a result of last year’s visit by the Chinese Vice Premier to Iran and the visit of the Iranian President to China, important agreements were reached and promising commercial contracts were signed. Thus, during Ebrahim Raisi’s visit to Beijing in February 2023, the two countries signed a long-term 25-year agreement, including numerous cooperation agreements in areas such as energy, mining, transport, agriculture, petrochemicals, information technology and tourism.

It is planned to assist in the development of the financial and insurance sectors, open bank branches, create an Iran-China Joint Bank, build a railway, develop fossil energy infrastructure, strengthen strategic corridors, develop the Makran coast, and reconstruct ports and highways.

Recently, the Chinese Consulate General was opened in Bandar Abbas in southern Iran, which can play an important role in developing relations between the two countries and deepening logistics and commercial cooperation between China and Iran, and especially through the INSTC (International North-South Transport Corridor).

Iran has huge proven reserves of natural gas and oil in the world. In China’s energy diversification policy, Iran has significant potential to contribute to China’s energy security. Over the past decade, despite US sanctions, China has been the largest buyer of Iranian oil. Of course, Beijing has become much more cautious, but continues to purchase “black gold” from Tehran and maintains its share in total oil imports. In addition, Iran is one of the main exporters of iron ore and steel ingots to the Middle Kingdom.

In 2016, President Xi Jinping made a successful visit to Iran, during which a memorandum of understanding on Belt and Road cooperation was signed. In fact, with the Belt and Road Initiative, China aims to expand transport and logistics infrastructure, trade ties and increase cultural exchanges.

In this global project, Iran occupies a strategic position along the old Silk Road, and China seems to view Iran as the optimal corridor to provide access to the Middle East, Central Asia and the Caucasus. In this regard, China’s first international freight train to Iran was launched in June 2022, the Tehran-Mashhad high-speed rail system is being modernized, and the Imam Khomeini Airport is being improved.

Beijing is the fourth largest investor in Iran. Over the past year, China has invested US$2.5 billion in Iran. In addition to the 150 percent increase in Chinese direct investment in Iran in 2022, some Iranian sources estimate that an additional $16 billion will be invested through the use of various financial instruments.

Along with China’s assistance to Iran in improving food security and agricultural production capacity, Beijing is also willing to cooperate with Iran in the field of agriculture and import more quality agricultural products. Iran has appreciated China’s efforts to create a green channel to export its agricultural and food products to China. Last year, several agreements were signed in this area regarding quarantine procedures, the issuance of sanitary permits, and the export of dairy products, kiwi and citrus fruits.

In addition, the private sector of the two countries is expanding joint cooperation. The 25-year agreement envisions expanding bilateral cooperation in other sectors of the economy, workforce training, technology and tourism. China can help Iran develop tourism and reach 20 million Chinese tourists per year. The announcement of the abolition of Iranian visas for Chinese tourists also helped in expanding tourism exchanges.

China-Iran trade volume reached US$15.83 billion in 2022, showing a 7% increase over the previous year. China’s exports to Iran reached $9.5 billion, China’s imports from Iran – $6.4 billion. Iran’s share in the total volume of China’s international trade is still insignificant, but it has a steady upward trend and objective potential for future growth.

Iran’s main export goods to China continue to be crude oil, minerals, petrochemical products, construction materials, bitumen, rolled metal, and food. China, in turn, exported motor vehicles, industrial oils, fertilizers, medicines, construction equipment, electronic devices, textiles, rubber, automobile accessories and parts, paper and cardboard, and food products. This year, China came out on top among Iran’s trading partners, although it is still behind the UAE in terms of imports of Iranian goods.

The Western embargo policy towards Tehran certainly hinders the development of Iranian-Chinese trade and economic relations, but mutual interest in their development contributes to the adaptation of Beijing and Tehran to existing conditions, the search for ways to overcome the imposed sanctions and the implementation of joint programs and projects. This is largely helped by the membership of both states in the SCO, and now in BRICS.