China’s Resilience!

While US continues to strangle the emerging power, China continues to find alternatives.

The 2018 US trade deficit with China stood at over $400bn. In an attempt to strangle growing hegemony of China on the economic front, the mercurial US administration under President Trump in July 2018 slapped $34bn of Chinese goods with tariffs thus starting a trade war between US and China. The US imports from China amounted to around $540bn in 2018 out of which US has burdened $400bn of imports from China with over 10% tariffs and threatening to further increase it to 25% by end of September. On the other hand because of a civil strife in Venezuela, realignment of rest of South America with US and not so hopeful situation in Africa, Chinese investments and their returns looms in danger. 

However, the resilient China continued to look for alternates and divestment and even with ever more fervour continue to pursue its OBOR initiative across South Asia, Indo-Pacific, Central Asia and Europe! In line with the same, while US puts punitive sanctions on Iran after unilaterally withdrawing from P5+1 JCPOA in 2018 and crippling it with sanctions, China has announced to to invest a mammoth $280 billion in Iran. 

China’s OBOR Initiative

The investment will generally be centred in Iranian oil, gas, and petrochemical sectors. Beijing has also pledged to invest $120 billion in Iran’s oil sector and industrial infrastructure.

The agreement also permits China to purchase oil, gas and petrochemical products at low prices, with the right to delay the payment of these prices for two years in the Chinese national currency (Yuan). This agreement grants China a total discount of around 32 per cent on all oil, gas, and petrochemical products from Iran.This plan also emerged during the course of China’s “One Belt, One Road” initiative, in which Beijing intends to take advantage of the low-cost labour force available in Iran, to establish factories to be supervised by Chinese prominent companies.

China has successfully reached and executed similar agreements with oil rich nations in Latin America and Africa. It sees his return of loans guaranteed and his people and companies employed under long term contracts. We conclude China will always have more than one ways to achieve global hegemony. 

PS: Having mentioned about OBOR in the above write up and illustrations above, it may be noted that CPEC is an integral part of OBOR that would guarantee a fast, secure and efficient supply chain for China’s industry.

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