China-Iran Trade Report (November 2020)
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For Iran, Newfound Stability in China Trade Won’t Suffice
New data released by the General Administration of Customs of the People’s Republic of China (GACC) shows that Chinese exports to Iran were stable for the third straight month, falling from USD 626 million in October to USD 609 million in November. Imports fell more sharply, from USD 603 million in October to USD 498 million in December. The decline in imports is almost entirely attributable to China’s non-oil purchases. Declared oil imports (HS chapter 27) totaled USD 79 million in November, down just USD 5 million from the prior month. Overall, China generated a small trade surplus of around USD 110 million in November.
The November data, which lacked any signs of growth, may reflect the slowdown in manufacturing activity in Iran that began as a third wave of COVID-19 infections hit the country in October, culminating in a national lockdown late in the month. But even if the numbers may be underwhelming, the stability in bilateral trade, mirrored also in newfound stability in Iran’s foreign exchange markets, offers a base from which to work to expand trade links should a Biden administration lift U.S. secondary sanctions on Iran. No immediate response to Biden’s election can be seen in the November customs data, but it may be possible that Chinese enterprises, particularly those that have cut-back on Iran trade, will become more amenable Iran-related transactions as we approach Biden’s inauguration. A realistic goal for China-Iran trade will be to raise the value of Chinese exports to Iran back to a consistent level around USD 1 billions. Meanwhile, Iran will wish to see Chinese imports of Iranian oil—particularly direct imports reflected in customs data—approach USD 500 million per month.
Next month’s report will look at year-on-year changes in trade between 2018, 2019, and 2020 in order to provide further analysis on what Chinese and Iranian stakeholders can reasonably target as they seek to rebuild trade in the wake of sanctions and the pandemic.
