Apr 6, 2021, 1:26 PM
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Five major opportunities provided by Iran-China long-term cooperation

Tehran, April 6, IRNA – Signing the roadmap of the 25-year Iran-China Cooperation Document has thus far rarely been technically surveyed and it has been subject to political judgments. It can pave the way for development of Iran at least in five economic fields.

Signing the roadmap for the 25-year Iran-China Cooperation Document was the most important foreign event for Iran, that happened during the past week.

The Strategic Studies Office of Imam Sadeq (P), has keeping in mind the great significance of this roadman agreement, prepared a strategic report in five chapters, by its prominent researchers, Ali Azar-Aein, Ali Masoumi, Ali Judatvand, Ali Paymani and Ali Javan-Ja’fari, excerpts of which are presented below:

Iranian oil and gas industry to become region’s number 1.

Ever since the victory of the Islamic Revolution, and especially during the past decade under the US sanctions, mainly against the Iranian economy, the Iranian oil and gas industry has been faced with numerous restrictions.

The issue has been in the focus of attention of the Iranian officials, particularly because the country’s main income source has always been from the oil and gas exports. Such sanctions also somehow halted to development plans of the county and urged to Iranian officials to focus on alternative markets, such as China, that are not only capable of consuming Iran’s oil and gas, but are also politically speaking so strong in the world that they could keep on their economic transactions with Iran despite the US sanctions.

China has the second strongest economy in the world and has been seeking to balance its power with America in the Middle East and have an effective presence in this region.

In fact, Iran and China both have interests and in order to secure them they have signed some memoranda of understanding at the international scene. China seeks major energy sources on which it can have long term reliance, to decrease the probable risk of US sanctions, in addition to diversifying its energy basket.

Iran’s share of China’s imported oil decreased to 3% during the recent years, while Saudi Arabia and Russia have been increasing their share in China oil market during the same period. That is while in this new cooperation document Iran has accepted the commitment to provide China’s needed oil during the next 25 years, and on the other side China has accepted the commitment to spend its oil money debt in construction of infrastructure facilities, including in Iran’s oil and gas industries.

To reach that end, the two countries’ companies are encouraged to cooperate and make shared investments in construction and facilitating the Iranian oil and gas industries, providing appropriate storage for them, and selling Iranian oil and gas to China, or even other countries.

Meanwhile, sales of the Iranian petrochemical products to China, as well as Chinse companies’ partnership in Iranian oil fields will increase drastically, while observing the foreign investment laws of Iran. In addition, investments in small and medium size refineries in eastern, western and southern parts of Iran for making their products appropriate for export and attracting investors for development and modernization of the Chabahar Petrochemical Township are among the articles of the 25-year cooperation roadmap.

This roadmap is one of the unique opportunities for Iran in which not only the sales of its raw oil and gas is guaranteed, but also the chain of highly added value petrochemical products, too, is ensured throughout Iran.

China had increased its one million barrel per day oil imports from Iran in the year 2000 to 10 million in the year 2019, that was quite spectacular. But we need to keep in mind that during the recent years China, too, yielded to the US sanctions, and therefore the resulting risk for Iran is very great. Therefore, according to Ali Azar-Aein, a top analyst and researcher of the Strategic Studies Center of Imam Sadeq University, the roadmap for this cooperation needed to be provided step by step and appropriate with the Chinese side’s interests in any phase. In addition to that, in designing the sub-sections of the major plan, in a major part the shared interests of the two countries are defined and technicians’ role in designing and management of the contracts for cooperation with China is considered.

Gaining maximum revenue out of foreign trade

As mentioned above, the cooperation document has proponents and opponents, part of which is due to the ambiguities in it, and another part due to Iran’s bitter experience in dealing with the other countries. But surveying the issue from the scientific point of the view and based on realities opens new horizons before our eyes.

Researcher and analyst Ali Ma’sumi believes Iran’s efforts aimed at signing this contract is due to the win-win strategic nature of it, in which dependence of Iran on China is rejected and Iran’s full independence is preserved. For instance, China’s car manufacturing companies ever since the early 1980s signed comprehensive contracts with American and German major companies until in the course of a ten-year period they achieved masterpiece in that industry.

But the Iranian automobile industries have not had noticeable progress in that respect. If Iran wishes to gain progress we should not wait for the others to provide us with their advanced technologies, but before their entry, we are in need of having long term planning for full-scale cooperation with them in an appropriate cradle for development and advancement. Such cradles as development of the free industrial and trade zones that lead to attracting foreign investments, or revival of the macroscale east-west transit route, the New Silk Road, are among the strategies aimed at achieving those objectives.

Upgrading the car manufacturing industries, sign of modernization

One of the indices for advancement in today’s world is a country’s car industries, that leads to development of the after sales services. This industry has broad interactions with the pre and post industries as a key industry and broad potentials for creating jobs, economic, social and cultural development.

This industry is interlinked with over 60 other industries and is referred to as the locomotive in national industries. In today’s world China’s car manufacturing industries are among the most advanced with quite diversified products, and that country’s spare part industries are so strong that they have captured the entire world markets.

The 25-year Iran-China cooperation document provides that path for full-scale cooperation between the two countries’ car manufacturing companies aimed at transfer of technology and joint production aimed at sales in both countries and beyond. Iranian car manufactures gain the opportunity for partnership in designing the new industrial townships; applying new recyclable energy technologies in car manufacturing and a lot more.

But is should be kept in mind that getting involved in such activities, too, is in need of paying close attention to certain important points. Ali Judatvand, a researcher and expert in this field believes China has during the previous years viewed the Iranian car market merely as a consumer market and therefore this mentality must change so that both sides will be benefitted from those transactions. The time for implementing the projects must be well defined and the issue of money transfer, too, need to be resolved.

Asian dragon and payments for Iranian projects

The 25-year Iran-China Cooperation Plan includes a noticeable volume of investments by the Chinese side in Iranian infrastructure industries, that in addition to its economic aspect involves such fields as arms and munitions, security and information technology. According to Ali Peymani, five Iranian banks have thus far established interactions with China’s CITIC Trust Institute, which was involved in Iran’s first major financial deal with China after the JCPOA.

That institute is the largest financial firms that is trusted by the Chinese government, works on the field of management possessions, and is known as the Asian Dragon, according to a Blumberg report. Having ties with that institute and its presence in Iranian mining industries is one of the positive aspects of this letter of understanding, because it can provide a noticeable amount of hard currency in the framework of finance for Iran.

An opportunity for technological advancement and innovations

Ali Javan-Ja’fari, another researcher and analyst at the Strategic Studies Office of Imam Sadeq (P) University, believes blossoming of industrial production is one of the important aspects of the 25-year cooperation agreement, since it can transfer modern technology and innovative ideas to our country.

During the past decades unfortunately in the field of oil and gas industries and such fields as cooperation with the French Peugeot Company we have not gained satisfactory results. According to this researcher, in this new cooperation agreement special attention is paid to this issue. For instance, in the second paragraph of the agreement on transfer of technology the issue of improvement of the economic, technological and tourism fields is considered.

Increasing the level of cooperation among the two countries’ universities, technological and scientific centers, and boosting cooperation among the science-based companies are emphasized.

Basically, the technologically advanced countries are not interested in transfer of technology when they put up a project in a county, but according to this agreement, four strategies are in the focus of attention, such as cooperation among universities, prioritizing the science-based companies, and accelerating the innovative eco-system plans, all in line with the technology transfer objective.

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