Sunday, June 12, 2016

Defying Expectations: China’s Iran Trade and Investments By Emma Scott

By Emma Scott | Affiliate Researcher - Centre of Chinese Studies - Stellenbosch University - South Africa

Middle East Institute | Apr 06, 2016

This essay examines China-Iran trade relations, as well as Chinese investments in Iran. Particularly, it asks whether the stated Chinese-Iranian ambition to increase the value of bilateral trade to $600 billion within a decade is attainable. Additionally, it identifies the factors responsible for the trade deficit in Iran’s favor, and shows that the pace of China’s foreign direct investment (F.D.I) in Iran is slowing in spite of absolute increases.
Exaggerated Ambitions
The Iran-China commercial relationship has developed considerably since 1979, when China adopted its Open Door Policy and the Iranian Revolution took place. Within a decade, the volume of bilateral trade rose to approximately $400 million.[1] By 2014, the value of bilateral trade had reached $51.8 billion (see Chart 1). The growth of the Iran-China Chamber of Commerce and Industries (I.C.C.C.I.), from 65 members in 2001[2] to 6,000 today furnishes additional evidence of the expansion of the relationship.[3] Against this backdrop, during his January 22-23, 2016 visit to Iran, President Xi Jinping confidently pledged to promote trade ties to the value of $600 billion in ten years.[4] But is this objective attainable? One way to find out is by putting this figure in perspective.