Source: Global Times Published: 2018-8-6
Chinese companies can weather the first wave of unilateral US sanctions set to hit Iran on Tuesday by expanding the use of renminbi (RMB) in their transactions with Middle East countries, Chinese observers said Monday.
The US intends to fully enforce sanctions against Iran early this week on orders from US President Donald Trump, Secretary of State Mike Pompeo said Sunday, Reuters reported.
The report cited an anonymous US Treasury official as saying Washington's so-called "snapback" sanctions will be reinstated against Tehran 12:01 am EDT on Tuesday (just after noon on Tuesday Beijing time).
The sanctions target Iran's purchases of US dollars, its trade in gold and precious metals and its dealings with metals, coal and industrial software, the report said.
The sanctions will hurt the Iranian economy and further devalue the Iranian rial, but exert little direct impact on Chinese firms operating in Iran, Chinese experts told the Global Times Monday.
Limiting Iran's purchases of US dollars and gold will further eliminate options in support of Iran's currency, and worsen the domestic Iranian shortage on the foreign exchange, Tian Wenlin, a research fellow in the Middle Eastern studies at the China Institute of Contemporary International Relations in Beijing, told the Global Times on Monday.
The sanctions effectively cut off remittance routes so that dollar-denominated international transactions - including those between China and Iran - would be affected, Hua Liming, former Chinese ambassador to Iran, told the Global Times on Monday.
Chinese firms can bypass the blockade by expanding renminbi payments, a trend in staple products that was already occurring in China-Iran trade before the sanctions, Hua explained.
A last wave of US sanctions will hit Iran on November 4. Those sanctions target Iran's lucrative energy sector, petroleum-related transactions and transactions with the Central Bank of Iran, Xinhua News Agency reported in June.
Chinese firms will not be seriously affected until then, Tian noted.
China is Iran's biggest crude oil customer.
China imported 39 million tons of crude oil in May, according to the General Administration of Customs, and the total crude oil China imported from January to May this year increased by 8.2 percent compared to the same period last year.
The US sanctions against Iran and the ZTE case have rattled Chinese firms with business in Iran, Tian said, even though losses have not yet hit them.
China's trade with Iran grew to $37.2 billion in 2017, a 19 percent increase over 2016, according to Chinese customs data.
Hua Liming is a senior fellow of Chongyang Institute for Financial Studies at Renmin University of China.