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Opinion / Op-Ed Contributors

Iran deal makes China upgrade exports

By Mei Xinyu (China Daily) Updated: 2015-04-10 08:08

As an important player in the talks to resolve the Iranian nuclear issue, China welcomes the framework agreement even though it could have a dual impact on China's foreign trade and diplomatic strategy. Once all Western sanctions on Iran are lifted, the country is expected to export a larger volume of oil to other countries, increasing the oil supply worldwide and curbing oil prices. Such a scenario will benefit China as one of the world's leading oil importers.

In March, Iran's oil minister said its daily crude oil export would increase by 1 million barrels after sanctions were lifted. According to market forecasts, after a deal on the Iranian nuclear issue is struck, the country's exports are likely to increase by 200,000-600,000 barrels or even more a day.

The increase in Iran's revenues and purchasing power because of rising oil exports will strengthen its trade and financial ties with China. The framework agreement with Iran is also expected to boost the chances of settling the Korean Peninsula nuclear issue, which again would be in the interest of China and Russia, as well as the US.

The decades-long Western sanctions on Iran have left Chinese enterprises without Western competitors in the Iranian market. But once all the sanctions are lifted from Iran Chinese enterprises will face new Western competitors in the Iranian market. Also, the possible "aesthetic fatigue" of the Iranian people with Chinese goods could lead them toward Western products once they become available.

Therefore, China should try to raise the quality of its trade with Iran to prevent its enterprises from losing business to their expected competitors in the Iranian market.

The author is a researcher at the International Trade and Economic Cooperation Institute, affiliated with the Ministry of Commerce.

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