Iran's Economic Ties with China Deepen

By Henry Srebrnik, [Summerside, PEI] Journal Pioneer

Iranian Foreign Minister Mohammed Javad Zarif and his Chinese counterpart Wang Yi met in Beijing Feb. 19.

Zarif led an Iranian delegation to Beijing that included the speaker of the Majlis, the Iranian parliament, Ali Larijani, and the ministers of finance and petroleum, as well as the CEO of the country’s central bank.

Wang told Zarif he hoped the visit would “deepen the strategic trust between our two countries.” 

Zarif replied that “Our relationship with China is very valuable to us. We consider the comprehensive strategic partnership between Iran and China as one of our most important relations.”

China’s President Xi Jinping also threw his weight behind efforts to build stronger relations between Tehran and Beijing.

“China is seeking to develop strategic wide-ranging relations with Iran,” he said in a meeting with Larijani.

The Majlis speaker pointed to “historical” and “friendly” relations between the two sides and described Beijing as “a reliable partner” for Tehran.

Larijani indicated that Tehran is prepared to cooperate with China’s Belt and Road Initiative.

President Xi’s infrastructure project, launched in 2013, seeks to connect China to global markets by linking Asia and Europe via a set of land and maritime trade routes.

The project is valued at more than one-trillion dollars, spanning over 60 countries across Asia, the Middle East, Europe, and Africa. And Iran is at the geographic and logistical center of this new Silk Road between east and west.

For millennia, Iran has prospered as a trading hub linking east and west. Now, that role is set to expand in coming years.

Iran is now critical to China’s ability to realize its economic ambitions. Other routes to western markets are longer and lead through Russia, potentially a competitor of China.

The proposed 3,200-kilometre route of the new Silk Road begins in Urumqi in western China and continues to Iran, where it will continue northwest through Turkey into Europe.

China and Iran have already cooperated with each other in the construction of some lines on Tehran’s subway, and on the Tehran-Isfahan high-speed railway currently under construction.

Other rail projects will connect Tehran and Mashhad with deep water ports in the country’s south.

In a 2016 test, China and Iran drove a train from the port of Shanghai in eastern China to Tehran in just 12 days, a journey that takes 30 days by sea. 

In Iran, they used the existing track between Tehran and Mashhad, powered by a slower diesel-powered train. When the new line is opened in 2021, it is expected to accommodate electric trains at speeds up to 200 kilometres an hour.

Last November, United States President Donald Trump imposed sanctions on Iran, resulting in a depreciated currency, rampant inflation is rampant, and high unemployment. 

Boosting ties with China and Russia, permanent members of the UN Security Council, would help reduce the impact of U.S. pressure. And China is indeed looking for ways to keep Iran afloat.

 “China has healthy, superb, extensive and stable relations with Iran, particularly in the field of economy, and we want to further expand them,” remarked China’s Assistant Foreign Minister Zhang Jun last summer.

Iran could facilitate China’s relations with the Middle East and Europe via the road, he noted.

As well, joint projects in Iran’s oilfields will help the economic development of both countries. China is an important market for Iranian oil – Beijing imports approximately 10 percent of its oil from Iran -- and because of American sanctions, it is the only source of the large amounts of capital Iran needs to finance critical infrastructure projects.

Today, China is Iran’s most important trading partner. Chinese and Iranian trade is based on everything from energy to arms, from nuclear technologies to Chinese infrastructure investment in Iran, from sunflowers to hijabs.

Chinese state companies are active all over the country, building highways, digging mines and making steel. Tehran’s shops are flooded with Chinese products and its streets full of Chinese cars and buses.

 “China is dominating Iran,” declared Mehdi Taghavi, an economics professor at Allameh Tabataba’i University in Tehran, but he suggested that the “Iranian authorities do not see any drawbacks to being dependent on China. Together, we are moving ahead.”