China and Iran draft a $400 billion pact

[Octavian]

thoughts ?

 

[AbdiGeedi]

I agree with Shirvan that this announcement might be a hoax or a half-baked initiative.

1. China doesn't have good track record on following through with its mega projects.

The much advertised Nicaragua Canal project did not materialize. Pakistan is disappointed with the way Chinese projects are turning out and increasingly shifting toward Turkey. Many African and Asian developing countries are rethinking their agreements with China on the Belt and Road initiative as it results in countries being in unbearable debts and giving up the control of their resources to China.

2. China is not stupid and knows Iran is not the kind of a country it can bully and extract concessions from. Iran has rich history and is very similar to Turkey in self-respect. In Turkey, China invested in railroads and other infrastructure projects under the Belt and Road initiative but failed to gain influence. Iran won't be any different. Why would China dump $400 billions in such a country?

3. Iran can only benefit from the proposed project if China buys Iranian oil and gas. The reality is the US is far more important for China as an economic partner than Iran. China basically stopped buying the Iranian oil when Trump instituted the sanctions against Iran. It is unlikely to change.

4. Iran as a manufacturing hub is only good for its domestic market as Iran is not big and deprived of in participating in international trade of consumer goods. Iranian market is too small for this magnitude of investment as its population doesn't have sizeable purchasing power. Surely China is not gonna make goods in Iran and export them back to China.

5. The Chinese base in Iran is a pipe dream. Iran will not allow a full-fledged foreign base on its territory. Russia and Turkey tried once and came out of it empty-handed.

I am pretty sure there many other points to be made for and against the feasibility of the pact. I just pointed out few that came to my mind. I didn't talk about Israel on purpose as to not complicate my points even further, but I am aware.

 

[Awdalia Rising]

China main goal is targeting poor countries who can’t defend themselves from China physically. Iran isn’t exactly poor (sanctions really hurt them) and Iran isn’t exactly a country you would want to go to war with.

I think this is only because Iran doesn’t have many friends besides Russia and China. Not too many options

 

[CanoGeel]

I agree with Shirvan that this announcement might be a hoax or a half-baked initiative.

1. China doesn't have good track record on following through with its mega projects.

The much advertised Nicaragua Canal project did not materialize. Pakistan is disappointed with the way Chinese projects are turning out and increasingly shifting toward Turkey. Many African and Asian developing countries are rethinking their agreements with China on the Belt and Road initiative as it results in countries being in unbearable debts and giving up the control of their resources to China.

2. China is not stupid and knows Iran is not the kind of a country it can bully and extract concessions from. Iran has rich history and is very similar to Turkey in self-respect. In Turkey, China invested in railroads and other infrastructure projects under the Belt and Road initiative but failed to gain influence. Iran won't be any different. Why would China dump $400 billions in such a country?

3. Iran can only benefit from the proposed project if China buys Iranian oil and gas. The reality is the US is far more important for China as an economic partner than Iran. China basically stopped buying the Iranian oil when Trump instituted the sanctions against Iran. It is unlikely to change.

4. Iran as a manufacturing hub is only good for its domestic market as Iran is not big and deprived of in participating in international trade of consumer goods. Iranian market is too small for this magnitude of investment as its population doesn't have sizeable purchasing power. Surely China is not gonna make goods in Iran and export them back to China.

5. The Chinese base in Iran is a pipe dream. Iran will not allow a full-fledged foreign base on its territory. Russia and Turkey tried once and came out of it empty-handed.

I am pretty sure there many other points to be made for and against the feasibility of the pact. I just pointed out few that came to my mind. I didn't talk about Israel on purpose as to not complicate my points even further, but I am aware.

I agree with all the points except that u said Iran is not big .
Iran is Yúuuuuuuuge, it borders many countries from the gulf countries to Iraq to Afghanistan to Russia and has close to 100 million population.
Persian gulf, black Sea all vital world trade routes.
It's perfect place for a mega project my dude.

Edit. I 4got Azerbaijan and all the Stan countries in central Asia

 

[CanoGeel]

I watched the clip. It seems they both playing chess and using each other for their respective geopolitical purposes.
I wont be surprised if half of these projects don't materialize but Iran is sure not like Pakistan.
It has way more resource in the form oil and gas and it's more strategic both politically and business wise.

On the other hand China's closeness to Pakistan is for the most part to contain Indian influence in south Asia uno

 

[AbdiGeedi]

On the other hand China's closeness to Pakistan is for the most part to contain Indian influence in south Asia uno

Pakistani nuclear program was assisted by China to keep the region more balanced when India went nuclear.

 

[GeeljirePoet]

The Iranians are in a desperate economic state following the crippling US sanctions.Also,the US vehemently dissuades the world from doing business with the Iranians .And more recently ,the unexplained fires and cyber warfare from US and their Israeli partners worsened the situation for Tehran .So,the recent deal is a tough one in a tough times for the Iranians.On the other hand,the Chinese are no longer interested in appeasing the US by not purchasing the Iranian oil because Washington is not showing any sign of ceasing their cold war with China .From that perspective,The chinese may want to play the iranian card in the future Sino-American truce deal .And by inking such a deal,the chinese are able to flex their muscle to curb indian economic adventures in Iran .A win win deal for both parties in the long term if it materialises but the realities on ground dont favour such an a expensive deal .

 

[AbdiGeedi]

On the other hand,the Chinese are no longer interested in appeasing the US by not purchasing the Iranian oil because Washington is not showing any sign of ceasing their cold war with China.

Chinese companies badly need access to the Western capital markets as China itself is drowning in debt. To sustain growth, they need to have access to the US and the EU as these two are China's biggest trading partners. Since the dollar is the de facto world currency, China will not risk its ties with the US over Iran.

You could say China is the house of cards. Its GDP is over $14 trillions. Its internal debt is over 300% of its GDP or $42 trillions. Its foreign debt is over $2 trillions. Chinese economy sits on an enormous pile of debt.

Trump is planning to de-list Chinese companies from the US stock exchanges for non-compliance with the US accounting standards in 2022. China is begging the US not to do so.

Just few days ago the U.S. Health and Human Services Secretary was in Taiwan on a three day visit. This was the first US high ranking visit to Taiwan in 41 years. China's diplomatic response was pretty meek. Trump is slowly dismantling China's super power image.

I think this deal with Iran is a Chinese soap bubble.

How big is China's debt and who owns it?

China has increased its effort to reduce its domestic debt to curb financial risks, but its total debt is reported to have hit 335 per cent of gross domestic product (GDP) in 2020.

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