By Shahriar Kia
With the new US sanctions on the Iranian regime, especially on its Revolutionary Guard Corps and affiliated companies, the regime’s foreign trade is losing its stability.
Following the billion-dollar fines on European banks for their violation of US sanctions, China has slowly begun cutting its business ties with Iran.
According to reports from China’s airport customs, the trade volume of this year’s January and February has dropped by around 50% compared to the same timeframe last year.
It’s also reported that China’s exports to Iran have declined by 65% (in other words, has reduced from 1.151 billion dollars to 2.85 billion dollars) which given the new round of sanctions will go even more downhill.
China’s exports to Iran are mainly petrochemicals, cars, and food; all of which have been reported to have significantly reduced recently.
hurdles between Iran and China
The most important hurdle between the two is of financial nature; because just like Europe, China is also facing difficulties in its financial transactions with Iran.
With the previous sanctions on Iran, ie prior to JCPOA, China had opened a special conduit for its transactions with Iran, known as “Kunlun Bank”.
This bank was founded by the National Petroleum Corporation of China in 2009 and was aimed to do what INSTEX does.
The US Department of Treasury sanctioned Kunlun Bank back in 2012, but because Kunlun did not have any affiliations with Europe or US, it managed to survive. However, recent reports suggest that it is now experiencing some challenges in its trades with Iran.
blockage of trade bypaths
On 17th April 2019, Shargh newspaper reported from an Iranian businessman in China: “considering that in early April, the new sanctions began, we need to think of a new plan which takes into account the trade bypaths with Iran”.
According to Shargh: “ABC, China Bank, and other banks alike, are closing the accounts of Iranian citizens without properly notifying them in advance”.
There are many reasons why China is doing this; the main reason is the very same reason why the French energy giant TOTAL quit Iran Gas Project a while back.
With the increasing pressures from US, and also with China’s involvement in FATF (ie in combat against money laundering), China is slowly distancing itself from the Iranian regime.