{"id":6952,"date":"2019-09-26T10:45:37","date_gmt":"2019-09-26T07:45:37","guid":{"rendered":"https:\/\/rasanah-iiis.org\/english\/?p=6952"},"modified":"2019-09-26T10:45:37","modified_gmt":"2019-09-26T07:45:37","slug":"will-china-give-iran-a-big-credit-line","status":"publish","type":"post","link":"https:\/\/rasanah-iiis.org\/english\/monitoring-and-translation\/reports\/will-china-give-iran-a-big-credit-line\/","title":{"rendered":"Will China Give Iran a Big Credit Line?"},"content":{"rendered":"

This past week, news that China will grant Iran a $400 billion credit line turned out to be false. But the two countries are exploring ways to boost finance and investment opportunities that have dropped since the United States withdrew from the Iran nuclear deal and reimposed sanctions against Iran in May 2018.
\nSince March 2019, Beijing and Tehran have examined ways to circumvent US sanctions. In April, Iran sent a high-level delegation<\/a><\/u> to attend a forum of the Belt and Road Initiative in China.
\nChina-Iran trade talks have not been as promising as the two sides had hoped for, but they have sought to address the challenges in order to sign mutually beneficial trade deals.\u00a0In May, Washington\u2019s revocation of oil waivers slowed down trade between China and Iran by at least half its volume. The waivers allowed China to import oil from Iran despite the sanctions. China has also curbed Iran\u2019s access to its financial and banking sectors in order to avoid any major violation of US sanctions.
\nThis took place despite otherwise optimistic projections for trade. In mid-2018, the Iranian Chamber of Commerce said that Iran-China trade<\/a><\/u> would reach $42 billion by the end of the year. From January to November 2018, the bilateral<\/a><\/u> trade volume was $33.39 billion. The figure was not very different from 2017, when trade between China<\/a><\/u> and Iran reached $37.1 billion. By June 2019, figures showed that the Iran-China trade volume declined<\/a><\/u> by 35 percent. But there is still hope on both sides that trade could reach the levels<\/a><\/u> seen before 2014 when it stood at $52 billion.
\nThe reporting of China\u2019s new credit line of $400 billion to Iran was carried out against the backdrop of economic uncertainty. Initially, the report came out in Iran, and it was published by several hardline papers<\/a><\/u>, based on a statement by the Iranian Money and Capital Market Commission of the Tehran Chamber of Commerce.
\nThe news then spread across credible international media<\/a><\/u> outlets that failed to check the facts. It also led to unrealistic policy speculations inside Iran. Iran\u2019s Energy Bourse, a body responsible for financing<\/a><\/u> oil and gas projects, predicted that Iran would soon turn into West Asia\u2019s energy hub.
\nThese speculations forced Iran\u2019s Ministry of Economy and Finance to deny that a credit<\/a><\/u> line was granted. According to Saeed Mohammad Ali Hosseini, a deputy at the ministry and head of the Investment and Technical Economic Aid Organization, the Chinese credit line is only at the proposal stage and part of a larger financing project that Iran, China, and Russia aim to develop. While talks on the issue have been held, they are not final and no agreement for a $400 billion line of credit has been signed.
\nEven if it had, the credit line does not justify the transfer of huge sums of money to Iran. The line is designed to offer step-by-step financing for defined projects that more than likely would materialize slowly over several years, and most of them would cost less than a few billion dollars.
\nThere is no project large enough to absorb the entire sum of the credit, even in Iran\u2019s oil and gas fields that require in total an annual sum of $40 billion to $60 billion to boost production.\u00a0 US sanctions have prevented Iran from attracting foreign investment for even much smaller energy projects.
\nSo far, according to Hosseini, Iran is trying to quickly approve projects<\/a><\/u> to receive future financing from China, with projects granted\u00a0 eligibility\u00a0 every two to three weeks.
\nThe move aims to strengthen the comprehensive strategic partnership signed between China and Iran, put in place as part of Beijing\u2019s economic partnership diplomacy in 2016.
\nUS sanctions have hindered any large-scale Chinese investment in Iran. But China is emphasizing its strategic partnership with Iran as Beijing faces tariff and trade wars with the United States. Even so, it is highly doubtful that China would jeopardize its trade relations with the United States because of Iran. China-US trade reached $660 billion<\/a><\/u> in 2018. Moreover, China\u2019s Belt and Road Initiative is estimated to raise some $600 billion to $800 billion in the next three to five years, and it is unlikely that Beijing<\/a><\/u> would invest nearly half of that sum in Iran.
\nCapital injection from China into Iran\u2019s economy\u00a0has remained slow, but it has provided China with numerous advantages over other investors, such as increasing its ability to win bids and to receive priority in forthcoming bids. In addition, it has increased Beijing\u2019s leverage inside Iran, even allowing it to avoid bidding in order to quickly win contracts that Iran planned to offer foreign investors to develop major infrastructure projects including in its oil and gas fields.<\/p>\n","protected":false},"excerpt":{"rendered":"

This past week, news that China will grant Iran a $400 billion credit line turned out to be false. But the two countries are exploring ways to boost finance and investment opportunities that have dropped since the United States withdrew from the Iran nuclear deal and reimposed sanctions against Iran in May 2018. Since March […]<\/p>\n","protected":false},"author":9,"featured_media":6953,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[3310,424,3311,12,3312],"class_list":["post-6952","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-reports","tag-big-credit","tag-china","tag-credit-line","tag-iran","tag-will-china-give-iran-a-big-credit-line"],"_links":{"self":[{"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/posts\/6952","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/comments?post=6952"}],"version-history":[{"count":1,"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/posts\/6952\/revisions"}],"predecessor-version":[{"id":6954,"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/posts\/6952\/revisions\/6954"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/media\/6953"}],"wp:attachment":[{"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/media?parent=6952"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/categories?post=6952"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rasanah-iiis.org\/english\/wp-json\/wp\/v2\/tags?post=6952"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}