Several bilateral trade agreements were signed on Saturday 16 July between the Senior Executive of the Communist Party of China, He Guoqiang and Iran’s Vice President Mohammed-Javad Mohammadizadeh.
Whilst the two nations have had a strong diplomatic 40 year relationship, established in 1971, the agreements are aimed to increase trade exchanges as China emerges as a leading economic power. This relationship was made stronger when economic sanctions were imposed on Iran over suspected nuclear power programs in Tehran, forcing Iran to turn to China for support.
The areas covered within the agreements are water, energy, mining and the industrial sectors. Under the new agreements, China will be investing heavily in Iran’s infrastructure needs.
Amongst the agreements, China will invest in a water diversion project and a dam. In a $500 million deal China will provide Iran with 60 energy incinerators. The installation of these is aimed for this year and will be based in many of Iran’s cities, particularly in the northern region of the Caspian Sea. Along with the infrastructure investments China has also agreed to hike up its imports of Iranian mineral products such as Celestine. The nation will also begin importing large amounts of chrome ore.
Iran currently holds the position of China’s third largest supplier of crude oil, providing China with 12% of its yearly oil consumption; this roughly amounts to one million barrels a day.
In 2010 bilateral trade was up between the two countries by 38.5% in 2009, which amounted to $29.3 billion. During this year China had exported goods to Iran worth $11 billion and imports had an amounted worth of $18.3 billion.
However in 2011, trade has risen greatly, particularly during the first four months of the year. Direct investment from China has risen by 48.3% in the first quarter at a value of $178 billion. Trade exchanges between the two countries experienced a growth of 55% during the same four months totalling $13.28 billion.
Whilst trade between the two nations currently stands at $30 billion, before the agreements were signed, the Iranian President Mahmoud Ahmadinejad publicly called for trade between China and Iran to increase to $100 billion a year.