How has China benefited from US sanctions on Iran?

Emad Abshnas

Amid political disputes over tariffs imposed by the United States on Chinese goods, Elna reported that foreign ministry sources confirmed to the agency that China would continue to buy Iranian oil, despite the cancellation of US exemptions.

A Chinese Foreign Ministry spokeswoman said earlier that China would face US sanctions on Iranian oil.

China plans to invest $ 280 billion in Iran's oil, gas and petrochemical sectors, which are being hit by US sanctions, according to the Petroleum Economist magazine.

The magazine quoted a senior energy source linked to the Iranian Oil Ministry; saying that this huge investment is the key point in a new agreement between the two countries, and was confirmed during the visit of Iranian Foreign Minister Mohammad Javad Zarif to China last August.

Beijing has also pledged to invest another $ 120 billion in Iran's oil and industrial infrastructure.

Despite sanctions against Iran, according to World Bank statistics, the Iranian economy has an estimated GDP of $ 450 billion and a gross national product of $ 1,750 billion, meaning that 80 million Iranians constitute a large, attractive economic market for any investor.

The United States has imposed sanctions on the Chinese oil company "Juhi Genrrang" because of its continued purchase of oil from Iran.

But the US-led economic war against China and Iran has led to an unprecedented rapprochement between the two countries. Today, more than $ 400 billion in Chinese projects and investments are being talked about.

tourism
Iran has canceled visas for Chinese citizens who want to travel to Iran, which would open the way for thousands of Chinese tourists to travel to Iran.

Iran will grant long-term investment in hotels and tourism projects to Chinese companies specialized in foreign tourist areas in some tourist areas and free zones in the country.

Some people may not know why the visas for Chinese citizens are unilaterally lifted, but China sends more than 100 million tourists in tourist groups to the world each year, and Chinese tourists spend the equivalent of $ 120 billion a year, according to statistics published by the China Tourism Organization.

According to Chinese laws, most Chinese cannot travel wherever they want, but the Chinese government appoints who they can travel to through their tourist offices.

Chinese President Chen Jinping visited Tehran in 2016, during which he met with Iranian leader Ali Khamenei and Iranian President Hassan Rouhani, and discussed the issue of China's assistance to Iran in the economic fields.

"How much is your income from oil? Make room to send you Chinese tourists to Iran and we guarantee you double your oil income in cash from Chinese tourists," the Chinese president joked.

Iran seems to have followed the Chinese leader's advice after the United States reimposed sanctions on it and began to give them access.

The path of oil towards China
The Iranian Oil Ministry refuses to issue any information about the volume of oil exports or destinations, but according to some sources in the Iranian oil company, the Chinese are trying to use Iran's card to pressure the United States.

According to their statistics, the Chinese imported about 230 thousand barrels of Iranian oil per day before raising the volume of import to more than 650 thousand barrels per day. They also import other quantities at unofficially reduced prices from the Iranians.

Bloomberg statistics show that the Chinese have officially imported more than 12 million tons of Iranian crude oil since the beginning of this year, with 10 million tons delivered to Chinese refineries, while 2 million tons were stored in stores belonging to the Iranian oil company in China.

According to Bloomberg statistics, about 20 million barrels of Iranian oil have been mobilized in 10 oil tankers, on the seas and en route to China, and some are waiting outside the ports to clear their stocks.

According to the Bloomberg report, the Chinese bought this oil from Iran at great and very attractive discounts.

Projects
But the economic cooperation between the two countries is not limited to the field of buying oil only.

The prospects and visions of the Chinese dragon are not limited to extending a route from Iran to Europe, but the Chinese plan to take advantage of the cheap and young manpower in Iran to produce their goods abroad and export directly from Iran.

To facilitate this opportunity for the Chinese, Iran has opened free industrial zones on the Iraqi, Pakistani and Turkish borders and the banks of the Oman Sea and the Gulf. Chinese companies have been allowed to set up their factories in these areas and are exempt from all fees for a long period of up to 25 years. Huge factories, such as automobile factories, Chinese cars will be exported to the region of these free zones.

China pays one-third of the price of oil it imports from Iran through development projects in Iran, such as railways, roads, transportation and factory construction, while the other third is paid by exporting Chinese goods to Iran, and the remaining third is paid in cash and in Chinese currency to avoid US sanctions. On the US dollar.

Chinese companies have received a number of projects that European companies have signed contracts to implement in the areas of oil and gas and withdrew because of US sanctions.

Official trade between Iran and China now stands at more than $ 35 billion, despite US sanctions, according to statistics at the end of 2018, but the two countries are seeking to raise it to $ 600 billion in the next 10 years; which will only happen if there are huge projects , Among them is much larger than existing projects.

Roads and transportation
China has signed a cooperation document in which it pledged to invest about $ 40 billion in Iranian roads and communications, according to its plans to connect the Silk Road, which dreams of reviving it in ten years starting in 2016.

The train, which connects the Chinese city of Shenzhen to the Iranian border to the northeastern Iranian border at the end of January 2016, crossed 10,399 kilometers across Kazakhstan and Turkmenistan within 14 days.

European companies were due to implement projects linking these railways with a European railway through Turkey on the one hand, and the Gulf and the Sea of ​​Oman on the other, but these companies breached their contracts, and Iran signed contracts with Chinese companies to implement half of the work and Iranian companies doing half The second work of 2018.

Prospecting for cryptocurrencies
The economic relations between Iran and China are not confined to traditional industries or roads and transportation, but the Chinese have begun digging for electronic digital currency inside Iran, taking advantage of the reduced value of energy there.

In this way, the Iranians can convert oil or solar, water and wind power to digital currency, where the Iranian government decided about a month ago to allow different companies and institutions to explore the digital currency.

In this way, Iran will not need to export its oil abroad, but will convert it to electricity and then to the digital currency at home.

The Iranian Ministry of Industry and Commerce also decided to issue licenses for companies and establishments that establish special plants to produce electricity from clean energy (sun, wind and water) and allow the companies themselves to extract digital currency from the production of energy in these plants.

Over the past two months, Chinese companies have rushed to get licenses to set up clean power plants.

The Ministry of Jihad of Iran has issued dozens of licenses to Chinese or Sino-Iranian joint ventures with the aim of establishing pastures for raising livestock or advanced industrial farms, as well as industrial fishing licenses (these licenses faced considerable internal opposition and the ministry was forced to suspend them).

The nuclear deal stipulated that China would redesign a number of Iranian nuclear facilities, most notably Arak for plutonium and heavy water, along with the United States and Britain.

After the United States came out of the nuclear deal and Britain shied away from fulfilling its commitments, China has become the only partner to implement this project in partnership with the Iranians.

Because of US sanctions against Iran, Tehran and Beijing are establishing a mechanism by which Chinese investors in Iran can be paid by exporting Iranian oil to China.

The above statistics show that China is the biggest beneficiary of US sanctions on Iranian oil, on the one hand, and Iran, on the other hand, is benefiting from the economic war between China and the United States to circumvent US sanctions against Iran.