Xi Jinping

China’s President Xi Jinping seeks ‘early bird’ advantage with Iran as he lands in Tehran just days after lifting of sanctions

PUBLISHED : Saturday, 23 January, 2016, 12:11am
UPDATED : Saturday, 23 January, 2016, 1:47am

President Xi Jinping’s (習近平) visit to Iran, which comes just days after the lifting of international sanctions on the Middle Eastern nation, is aimed at securing “early bird” advantages ahead of Western competitors, analysts say.

Xi arrived in Tehran yesterday, less than a week after decade-long UN sanctions against the country’s nuclear programme came to an end last Saturday.

Beijing and Tehran nations planned to sign “around 17 cooperation documents in the economic, judicial, cultural, media and investment fields” during Xi’s two-day stay, Iranian ambassador to Beijing Ali Asghar Khaji said.

China has been Iran’s top trade partner for six years in a row, with bilateral trade hitting a record US$52 billion in 2014. It has also been the number one buyer of Iranian crude since 2011, when many countries, especially in the West, ramped up sanctions to strictly prohibit most forms of business with the country.

READ MORE: Key facts behind China’s warming ties with Saudi Arabia, Iran and Egypt as Xi Jinping signs mega oil deals during his Middle East tour

Pang Sen, Chinese Ambassador to Iran, said that aside from oil and gas investments, Iran was key to Xi’s “One Belt, One Road” development plan, which focuses on trade, infrastructure and the transfer of China’s excess industrial capacity.

“China would like to deepen our cooperation in road, railway, shipping and the internet,” Xi said in a signed article published by the official newspaper Iran on Thursday.

“Through that we can facilitate trade and investment between East and West Asia, reduce the cost of the international human, commodity and money flows, and reinforce and expand our energy, resource and industrial cooperation.”

Referring to economic ties with China, Iranian President Hassan Rowhani said his country would not forget “friends who helped us” in a difficult time.

Decades of Western sanctions had constrained the potential of Iran, which was rich in natural resources and boasted basic industrial development alongside a young and educated population, said Wang Wen, from the Chongyang Institute for Financial Studies, Renmin University.

With an improvement in the “external environment”, the country was on the eve of explosive growth, Wang said.

READ MORE: Multinationals ready to jump into Iran market after sanctions officially lifted

“With this timing, President Xi’s visit to Iran is like increasing one’s stock holdings when the price is still at the bottom but is about to surge,” he said.

Before the sanctions were lifted, countries including Germany and France had shown interest in re-establishing business ties with the Islamic republic. But China had a strong and irreplaceable edge in infrastructure and manufacturing capacity, said Xiao Xian, head of Middle East studies at Yunnan University.

“The economic relations between China and lran will get only closer as there are no more restrictions whatsoever,” said Xiao.

Analysts said the economic and political deals with Iran were likely to be as significant as those signed with Saudi Arabia a couple of days ago, as Xi would have to balance the sensitivities of two regional powers who have been at loggerheads over Riyadh’s execution of a prominent Shiite cleric.

“Unlike Saudi Arabia, Iran could serve as a bargaining chip in the China-US game and therefore has special strategic and geopolitical importance to China,” said Xiao. “That’s why he has to visit both sides in one trip, and keep a careful balance.”