China-Iran Trade Report (July 2020)
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Chinese Exports to Iran Reach Highest Level Since December 2019
New data released by the General Administration of Customs of the People’s Republic of China (GACC) indicate that China exported over USD 876 million worth of goods to Iran in July, the highest level of monthly exports since December 2019. The monthly export total is slightly higher than the average monthly exports observed in 2019 (USD 816 million) and points to recovering demand for Chinese raw materials, parts, and machinery among Iranian manufacturing firms.
July exports in HS Section 16 (which includes machinery and mechanical appliances) were up 20 percent from their June totals, reaching USD 305 million. Exports in HS Section 17 (which covers vehicles) rose 160 percent from their June total to reach USD 95 million, the highest monthly total this year.
Similar growth was seen in key categories of intermediate goods, Exports in HS Section 6 (which includes plastics and related articles) rose 55 percent from the June total to reach USD 80 million. Exports in HS Section 15 (which includes articles of base metals), rose 46 percent to USD 83 million.
This export growth, if sustained, will no doubt ease the concerns of Iranian manufacturers over the availability and affordability of inputs and equipment. But the recovery in Chinese exports to Iran was not matched by a recovery in Chinese imports. Notably, Chinese imports in HS Section 15 (which covers articles of base metals) hit a new low for 2020 at just USD 24 million, down USD 87 million from June’s total.
Overall, imports were USD 403 million in July, down slightly from the USD 415 million total in June. By comparison, Chinese monthly imports from Iran averaged USD 1.1 billion in 2019. The monthly trade deficit is at its widest point in the last two years (and likely much longer), a fact that may exacerbate the foreign exchange and payment related challenges facing China-Iran trade.
However, Iran did see a bump in China’s direct imports of Iranian oil, up from last month’s “effective zero” to USD 134 million. Meanwhile, imports of Malaysia oil also grew, much of which is re-exported Iranian crude. Taken together, Iran is likely running a smaller deficit with China than is apparent, although it is not clear how the intermediated oil sales contribute to the availability of foreign exchange.
