Archive for ‘iran’

08/07/2019

Seven Silk Road destinations, from China to Italy: towns that grew rich on trade

  • Settlements along the route linking Europe and Asia thrived by providing accommodation and services for countless traders
  • Formally established during the Han dynasty, it was a 19th-century German geographer who coined the term Silk Road
The ruins of a fortified gatehouse and cus­toms post at Yunmenguan Pass, in China’s Gansu province. Photo: Alamy
The ruins of a fortified gatehouse and cus­toms post at Yunmenguan Pass, in China’s Gansu province. Photo: Alamy
We have a German geographer, cartographer and explorer to thank for the name of the world’s most famous network of transconti­nental trade routes.
Formally established during the Han dynasty, in the first and second centuries BC, it wasn’t until 1877 that Ferdinand von Richthofen coined the term Silk Road (historians increasingly favour the collective term Silk Routes).
The movement of merchandise between China and Europe had been taking place long before the Han arrived on the scene but it was they who employed troops to keep the roads safe from marauding nomads.
Commerce flourished and goods as varied as carpets and camels, glassware and gold, spices and slaves were traded; as were horses, weapons and armour.
Merchants also moved medicines but they were no match for the bubonic plague, which worked its way west along the Silk Road before devastating huge swathes of 14th century Europe.
What follows are some of the countless kingdoms, territories, (modern-day) nations and cities that grew rich on the proceeds of trade, taxes and tolls.

China

A watchtower made of rammed earth at Dunhuang, a desert outpost at the crossroads of two major Silk Road routes in China’s northwestern Gansu province. Photo: Alamy
A watchtower made of rammed earth at Dunhuang, a desert outpost at the crossroads of two major Silk Road routes in China’s northwestern Gansu province. Photo: Alamy

Marco Polo worked in the Mongol capital, Khanbaliq (today’s Beijing), and was struck by the level of mercantile activity.

The Venetian gap-year pioneer wrote, “Every day more than a thousand carts loaded with silk enter the city, for a great deal of cloth of gold and silk is woven here.”

Light, easy to transport items such as paper and tea provided Silk Road traders with rich pickings, but it was China’s monopoly on the luxurious shimmering fabric that guaranteed huge profits.

So much so that sneaking silk worms out of the empire was punishable by death.

The desert outpost of Dunhuang found itself at the crossroads of two major Silk Road trade arteries, one leading west through the Pamir Mountains to Central Asia and another south to India.

Built into the Great Wall at nearby Yunmenguan are the ruins of a fortified gatehouse and cus­toms post, which controlled the movement of Silk Road caravans.

Also near Dunhuang, the Mogao Caves contain one of the richest collections of Buddhist art treasures any­where in the world, a legacy of the route to and from the subcontinent.

Afghanistan

Afghanistan's mountainous terrain was an inescapable part of the Silk Road, until maritime technologies would become the area's undoing. Photo: Shutterstock
Afghanistan’s mountainous terrain was an inescapable part of the Silk Road, until maritime technologies would become the area’s undoing. Photo: Shutterstock

For merchants and middlemen hauling goods through Central Asia, there was no way of bypassing the mountainous lands we know today as Afghanistan.

Evidence of trade can be traced back to long before the Silk Road – locally mined lapis lazuli stones somehow found their way to ancient Egypt, and into Tutankhamun’s funeral mask, created in 1323BC.

Jagged peaks, rough roads in Tajikistan, roof of the world

Besides mercan­tile exchange, the caravan routes were responsible for the sharing of ideas and Afghanistan was a major beneficiary. Art, philosophy, language, science, food, architecture and technology were all exchanged, along with commercial goods.

In fact, maritime technology would eventually be the area’s undoing. By the 15th century, it had become cheaper and more convenient to transport cargo by sea – a far from ideal development for a landlocked region.

Iran

The Ganjali Khan Complex, in Iran. Photo: Shutterstock
The Ganjali Khan Complex, in Iran. Photo: Shutterstock

Thanks to the Silk Road and the routes that preceded it, the northern Mesopotamian region (present-day Iran) became China’s closest trading partner. Traders rarely journeyed the entire length of the trail, however.

Merchandise was passed along by middlemen who each travelled part of the way and overnighted in caravan­serai, forti­fied inns that provided accom­mo­dation, storerooms for goods and space for pack animals.

The good, bad and ugly sides to visiting Chernobyl and Kiev

With so many wheeler-dealers gathering in one place, the hostelries developed into ad hoc marketplaces.

Marco Polo writes of the Persian kingdom of Kerman, where craftsmen made saddles, bridles, spurs and “arms of every kind”.

Today, in the centre of Kerman, the former caravanserai building forms part of the Ganjali Khan Complex, which incorporates a bazaar, bathhouse and mosque.

Uzbekistan

A fort in Khiva, Uzbekistan. Photo: Alamy
A fort in Khiva, Uzbekistan. Photo: Alamy

The double-landlocked country boasts some of the Silk Road’s most fabled destinations. Forts, such as the one still standing at Khiva, were built to protect traders from bandits; in fact, the city is so well-preserved, it is known as the Museum under the Sky.

The name Samarkand is also deeply entangled with the history of the Silk Road.

The earliest evidence of silk being used outside China can be traced to Bactria, now part of modern Uzbekistan, where four graves from around 1500BC-1200BC contained skeletons wrapped in garments made from the fabric.

Three thousand years later, silk weaving and the production and trade of textiles remain one of Samarkand’s major industries.

Georgia

A street in old town of Tbilisi, Georgia. Photo: Alamy
A street in old town of Tbilisi, Georgia. Photo: Alamy

Security issues in Persia led to the opening up of another branch of the legendary trade route and the first caravan loaded with silk made its way across Georgia in AD568.

Marco Polo referred to the weaving of raw silk in “a very large and fine city called Tbilisi”.

Today, the capital has shaken off the Soviet shackles and is on the cusp of going viral.

Travellers lap up the city’s monaster­ies, walled fortresses and 1,000-year-old churches before heading up the Georgian Military Highway to stay in villages nestling in the soaring Caucasus Mountains.

Public minibuses known as marshrutka labour into the foothills and although the vehicles can get cramped and uncomfortable, they beat travelling by camel.

Jordan

Petra, in Jordan. Photo: Alamy
Petra, in Jordan. Photo: Alamy

The location of the Nabataean capital, Petra, wasn’t chosen by chance.

Savvy nomadic herders realised the site would make the perfect pit-stop at the confluence of several caravan trails, including a route to the north through Palmyra (in modern-day Syria), the Arabian peninsula to the south and Mediterranean ports to the west.

Huge payments in the form of taxes and protection money were collected – no wonder the most magnificent of the sand­stone city’s hand-carved buildings is called the Treasury.

The Red Rose City is still a gold mine – today’s tourists pay a hefty

US$70 fee to enter Petra

. The Nabataeans would no doubt approve.

Venice

Tourists crowd onto Venice’s Rialto Bridge. Photo: Alamy
Tourists crowd onto Venice’s Rialto Bridge. Photo: Alamy

Trade enriched Venice beyond measure, helping shape the Adriatic entrepot into the floating marvel we see today.

Besides the well-documented flow of goods heading west, consignments of cotton, ivory, animal furs, grapevines and other goods passed through the strategically sited port on their way east.

Ironically, for a city built on trade and taxes, the biggest problem Venice faces today is visitors who don’t contribute enough to the local economy.

A lack of spending by millions of day-tripping tourists and cruise passengers who aren’t liable for nightly hotel taxes has prompted authorities to introduce a citywide access fee from January 2020.

Two thousand years ago, tariffs and tolls helped Venice develop and prosper. Now they’re needed to prevent its demise.

Source: SCMP

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05/07/2019

Chinese president appoints new ambassadors

BEIJING, July 4 (Xinhua) — Chinese President Xi Jinping has appointed six new ambassadors in accordance with a decision by the Standing Committee of the National People’s Congress, according to a statement from the national legislature Thursday.

Chen Hai was appointed ambassador to Myanmar, replacing Hong Liang.

Chang Hua was appointed ambassador to Iran, replacing Pang Sen.

Liao Liqiang was appointed ambassador to Egypt, replacing Song Aiguo.

Xu Erwen was appointed ambassador to Croatia, replacing Hu Zhaoming.

Yi Xianliang was appointed ambassador to Norway, replacing Wang Min.

Chen Xu was appointed China’s permanent representative and ambassador to the United Nations Office at Geneva and other international organizations in Switzerland, replacing Yu Jianhua.

Source: Xinhua

27/06/2019

China’s growing demand for clean energy and natural gas sparks contest in the Middle East

  • First Qatar, and now Saudi Arabia, are competing to dominate China’s fast-growing natural gas market, already the third largest in the world, as Beijing encourages the switch from coal to cleaner, greener energy
  • A PetroChina LNG tank at Rudong port in Nantong, Jiangsu province. China’s massive and rapidly growing appetite for natural gas is sparking off a scramble in the Middle East, as energy producers compete to become the biggest player in the market. Photo: Reuters
    A PetroChina LNG tank at Rudong port in Nantong, Jiangsu province. China’s massive and rapidly growing appetite for natural gas is sparking off a scramble in the Middle East, as energy producers compete to become the biggest player in the market. Photo: Reuters
    As more countries turn towards clean energy, the geoeconomic impact of natural gas as a fuel has become second only to that of oil. Over the past decade, the global demand for this carbon-free energy source has risen considerably and one major buyer is China.
    The third largest global market for natural gas, China has implemented government policies to replace the use of coal as fuel and millions of households are switching over to clean energy. Consequently, China’s market for gas expanded by a record 43 billion cubic metres last year to reach 280 billion cubic metres at the end of 2018.
    With the recent

    tax cuts in April

    , China’s gas consumption should continue to grow in the year ahead. As the demand spirals further, natural gas consumption in China is estimated to grow to around 620 billion cubic metres in 2030.

    Prioritising its energy security, Beijing last year approved a 22-year gas supply deal between QatarGas and PetroChina International Co. The agreement is PetroChina’s largest LNG supply deal by volume, and will provide 3.4 million tonnes of liquefied natural gas annually.
    With this deal, which QatarGas initiated with Total and ExxonMobil Corp as partners, Qatar achieved regional dominance and filled a vacuum left by major gas producer Iran, currently the target of US sanctions. Interestingly, Beijing has also unwittingly sparked off a competition between Qatar and Saudi Arabia, the kingpins of the Middle Eastern energy industry.
    A vessel carrying Qatar LNG looking to berth in Shenzhen, China last August. Qatar’s recent deal highlighted the massive and growing Chinese appetite for natural gas. Photo: Reuters
    A vessel carrying Qatar LNG looking to berth in Shenzhen, China last August. Qatar’s recent deal highlighted the massive and growing Chinese appetite for natural gas. Photo: Reuters
    China to become world’s top natural gas importer in 2019: report
    By exporting gas, as well as oil, Qatar sail unruffled through the

    economic and diplomatic boycott

    imposed by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt in June 2017, over allegations that Qatar supports terrorism and is friendly with Iran, which the region sees as an enemy. Qatar denies this. Meantime, Qatar plans to further increase its gas output. To attract more buyers, it is offering attractive long-term supply contracts to other countries in the region.

    Inspired by the success of Qatar Gas, Saudi Arabia has stepped up its efforts to capture this new market. The Saudi state-owned oil giant Aramco plans to build an “energy bridge” between Saudi Arabia and China to better meet Beijing’s growing requirements for oil, gas, including LNG, said Aramco’s chief executive Amin Nasser at an industry event in Beijing in March.

    Aramco, already a major supplier of crude oil to China, would need to invest US$150 billion over the next decade to realise its plans to convert crude oil into chemicals, and eventually become a gas producer. “We need to help our stakeholders – including here in China and the wider Asia region – realise that oil and gas will remain vital to world energy for decades to come,” said Nasser.

    An Aramco employee near an oil tank in Saudi Arabia. Aramco has grand ambitions to become a major producer of natural gas. Photo: Reuters
    An Aramco employee near an oil tank in Saudi Arabia. Aramco has grand ambitions to become a major producer of natural gas. Photo: Reuters

    The vision of Saudi Arabia as a major natural gas producer is in in line with Saudi Crown Prince Mohammed bin Salman’s economic plan Vision 2030. Riyadh has only Qatar to beat, with Iran on the back foot. Under sanctions pressure, Tehran, despite plans to increase gas exports, has clung on to just 1 per cent of the natural gas market, exporting 36.24 million cubic metres daily. Yet Iran was once part of the so-called regional gas troika along with Russia and Qatar, and is located at the cusp of several energy transit corridors. China, defying sanctions, continues to buy oil from Iran.

    In around five years, Riyadh could become a major gas exporter. Saudi Arabia has already replaced Iran as the main energy provider in countries such as China, Pakistan and India, and has made huge investments in energy projects in these countries.

    However, Qatar is also playing smart, sharply lowering its prices to clinch deals and make the right business connections. The competition for the growing natural gas market is a long game. The main possible setback for Riyadh is that its gas reserves do not match those in Qatar and Iran.

    Source: SCMP

26/06/2019

Pompeo meets India PM Modi for talks on trade, defence

NEW DELHI (Reuters) – U.S. Secretary of State Mike Pompeo met India’s Prime Minister Narendra Modi on Wednesday for talks on trade and defence issues that have strained ties between the countries.

Just days before Pompeo’s visit, India slapped higher retaliatory tariffs on 28 U.S. products following Washington’s withdrawal of key trade privileges for New Delhi.

Indian broadcasters showed footage of Pompeo exchanging handshakes with Modi at the prime minister’s official residence in the capital New Delhi on Wednesday morning. Neither side released details of the meeting.

India’s relations with Russia and Iran – both under U.S. sanctions – are also a sore point.

Under U.S. pressure, India has stopped buying oil from Iran, one of its top suppliers. The United States has also stepped up pressure on India not to proceed with its purchase of S-400 surface-to-air missile systems from Russia.

Pompeo is scheduled to have lunch with foreign minister Subrahmanyam Jaishankar, followed by a news conference at 1400 local time (0930 GMT), the foreign ministry said.

He is expected to round off the trip with a policy speech hosted by the U.S. Embassy on Wednesday evening, before departing on Thursday for the G20 summit in Japan.

Source: Reuters

17/06/2019

Oil tanker attacks: did Iran’s ties with China just go up in smoke?

  • Washington has blamed Tehran for an attack on two oil tankers near the Strait of Hormuz, putting pressure on Iran’s allies like China
  • Beijing usually backs its trade partner – but experts say the trade war with the US and problems with Huawei may have changed the equation
A tanker burns in the Gulf of Oman after a mystery attack that the United States has blamed on Iran. Photo: AFP
A tanker burns in the Gulf of Oman after a mystery attack that the United States has blamed on Iran. Photo: AFP
When 
Shinzo Abe

headed to Tehran this week for the first visit by a sitting Japanese prime minister in four decades, some in the diplomatic world imagined he could be the man to bring

Iran

back to the negotiating table with the

United States

.

Those hopes were torpedoed on Thursday when, on the same day Abe was meeting Iran’s supreme leader Ayatollah Khamenei, explosions ripped through two oil tankers, one Japanese and one Norwegian, near the Strait of Hormuz, a strategically significant shipping lane.
The attack immediately overshadowed an earlier success for Abe, who had met President Hassan Rowhani a day before and was assured Iran would stick to the terms of a 2015 agreement limiting its nuclear activities.
Washington accused Iran of being behind the attack on the tankers, releasing a video on Friday that it said showed Iran’s revolutionary guard removing an unexploded mine from one of the ships, and warning that it would “defend its interests”.
Iranian President Hassan Rowhani and Japanese Prime Minister Shinzo Abe meet Iran’s Supreme Leader Ayatollah Ali Khamenei in Tehran. Photo: Reuters
Iranian President Hassan Rowhani and Japanese Prime Minister Shinzo Abe meet Iran’s Supreme Leader Ayatollah Ali Khamenei in Tehran. Photo: Reuters

Tehran, for its part, claimed to have been set up, with its foreign minister Mohammad Javad Zarif saying “suspicious doesn’t begin to describe” the incident. So much, then, for hopes of mediation.

US President

Donald Trump

, who had encouraged the Japanese leader’s visit, admitted on Twitter soon afterwards that when it came to negotiating, “they are not ready, and neither are we!”

Still, the incident exposed more than just the naivety of those hoping for an Abe-led breakthrough. In raising the stakes in Washington’s confrontation with Tehran, it also threw the spotlight on Iran’s dwindling number of allies – and perhaps most significantly on its largest trading partner, China – which face mounting pressure to rethink the relationship.

Tanker attacks: world divided over Iran role as Saudi prince breaks silence
The day after the attack, China’s President

Xi Jinping

said Beijing would promote its ties with Iran “however the situation changes” – a comment made during a meeting with Iranian President Hassan Rowhani on the sidelines of the Shanghai Cooperation Organisation summit in Kyrgyzstan – but diplomatic observers question just how far China can go in accommodating its controversial trading partner.

BEST FRIENDS FOREVER?

Iran has long been able to count on support from China, which accounts for 30 per cent of the Islamic republic’s exports and imports, and its willingness to defy US pressure is a gamble at least partly based on an assumption it can continue to count on Beijing’s support.

As Iran’s largest economic partner – Chinese direct investment in Iran hit a record high of nearly US$4 billion last year, according to data analysis project ChinaMed – Beijing already plays a key role in relieving US pressure on Iran, said Mohsen Shariatinia, assistant professor of regional studies at Shahid Beheshti University in Tehran.

But experts warn that reliance will come into question as China becomes increasingly hamstrung by its own problems.

China has enough problems of its own, starting with US pressure on Huawei. Photo: EPA
China has enough problems of its own, starting with US pressure on Huawei. Photo: EPA
Chief among Beijing’s headaches are its

trade war

with Washington and the related assault on its

5G

giant

Huawei

– which, as analysts point out, originally ignited over allegations it was defying US sanctions on Iran. Beijing will also be well aware of the need to keep

Saudi Arabia

, its second-biggest oil supplier and Tehran’s critic-in-chief, happy.

On the other hand, analysts say, China will be wary of being seen to abandon its old friend, as doing so would send a message to other nations at odds with Washington that they could no longer look to China as a diversification strategy.
“This could mean Chinese investment is vulnerable to US interference,” said Esfandyar Batmanghelidj, founder of Bourse Bazaar, a media company that supports business diplomacy between Europe and Iran.
Sanctions drive Iranian students away from US towards Asia
Doing so, Batmanghelidj said, would put a question mark over one of China’s most significant foreign policies of recent years – President Xi’s signature

Belt and Road Initiative

to fund infrastructure across Eurasia.

THE BELT AND ROAD QUESTION
Tensions between Iran and the US have reached boiling point in recent weeks, after the Trump administration last month ended waivers on sanctions for nations importing Iranian oil – a move the US says is aimed at making the republic “radioactive to the international community” and which Rowhani has described as an “economic war against Iran”.
So far, China has largely stuck by the Islamic Republic, continuing to buy fuel from it despite the latest wave of US sanctions on Iranian oil that followed Trump’s decision last year to withdraw the US from the landmark 2015 agreement curbing Tehran’s nuclear development.
The deal had been widely lauded as a triumph of multilateralism and the dawning of a new economic era for Iran.
US releases video of ‘Iranian forces removing unexploded mine’ from ship
Part of its eagerness to support Iran has stemmed from the Islamic Republic’s key position in the Belt and Road plan. In 2017 alone, China signed deals for more than US$15 billion in Iranian infrastructure investment, according to the

Chinese Communist Party

mouthpiece China Daily.

Planned projects include high-speed rail lines, upgrades to the nation’s electrical grid, and natural gas pipelines. The two nations have also vowed to boost bilateral trade to US$600 billion in the next seven years.
“China sees Iran as its Western gateway, where not only is it a big market in itself, but it will also be the gateway to the rest of the 
Middle East

and ultimately to Europe for China,” said Anoush Ehteshami, professor of international relations at Durham University in Britain.

Nisha Mary Mathew, at the Middle East Institute in Singapore, said that China’s relationship with Iran was not just economic – but primarily strategic, with both nations envisioning an international order that was no longer dominated by the US and its Western allies.
DEFIANCE, FOR NOW
If the belt and road gives China good reason to stick with Iran, there are plenty of voices urging just that action. As Andrea Ghiselli at Shanghai’s Fudan University pointed out, US sanctions until now have only strengthened the hardline factions in Iran’s government.
The combination of the US withdrawal from the nuclear deal – which had the support of the international community – along with Europe’s tepid efforts to rescue it, may have emboldened those favouring resistance over negotiation.
Xi’s supportive comments in Kyrgyzstan were only the latest in a string of remarks from China that could encourage such factions.
If Trump kills off Huawei, do Asia’s 5G dreams die?
After China’s Foreign Minister Wang Yi met Iranian Foreign Minister Mohammad Javad Zarif in Beijing last month, the ministry’s spokesman Lu Kang said China’s economic relationship with Iran was “reasonable and lawful”.
Two months prior to that, China’s Minister of Commerce Zhong Shan, while hosting his Iranian counterpart Farhad Dejpasand, had claimed China’s “determination to maintain and develop the China-Iran comprehensive strategic partnership is unshakeable”.
Chinese President Xi Jinping with Iranian President Hassan Rowhani. Photo: AFP
Chinese President Xi Jinping with Iranian President Hassan Rowhani. Photo: AFP

Even so, the pressure is getting to some. In February, Foreign Minister Zarif temporarily resigned, in what Andrea Ghiselli at Fudan University in Shanghai called a clear sign of the “changing and precarious power balance with Iran’s foreign policy establishment”.

And nowhere is the pressure felt more keenly than the economy and China’s ability to serve as a lifeline.

“The real anxiety in Iran right now is about market share,” said Bourse and Bazaar’s Batmanghelidj. “If you’re exporting zero oil and your customers are buying oil elsewhere, you lose market share.

“The government wants to know if it agreed to go back to the negotiating table and the US promised sanctions relief, that there are people who are going to buy in significant volume.”

TURNING POINT: HUAWEI

For many analysts, the event most likely to have changed the equation in Beijing’s eyes is the arrest by the Canadian authorities of 

Meng Wanzhou

, the chief financial officer of Chinese telecom giant Huawei.

Meng’s arrest came at the request of the US government, which claimed her company had violated sanctions by selling equipment to Iran.
Many observers saw the action as Washington’s way of signalling to Chinese companies that they would face repercussions if they eased the pressure on Iran by continuing to trade.
Huawei’s chief financial officer Meng Wanzhou. Photo: Reuters
Huawei’s chief financial officer Meng Wanzhou. Photo: Reuters

“Going after Huawei was about going after Chinese enterprises – signalling that they can no longer trade with Iran with impunity,” Batmanghelidj said.

Since then, Chinese firms have shown increased skittishness towards trading with Iran. According to China’s General Customs Administration, Chinese exports to Iran declined by more than half between October 2018 and February 2019, from over US$1 billion to just under US$500 million.

Mohammad Ali Shabani, a researcher at the School of Oriental and African Studies in London, said other countries in the region were now watching to see if China would blink in the face of US pressure. “This could have dire consequences for China’s image as a reliable partner,” he said.

NOT JUST ABOUT AMERICA

There are reasons beyond US pressure that may factor into Beijing’s thinking. It has long stated its opposition to Iranian nuclear weapons development, and Chinese Foreign Minister Wang Yi has said that China is “ready” to take on “its due responsibilities and make a greater contribution to world peace and common development”.

Trade war: here are Beijing’s options – and none look any good

Zhao Hong, at the Research School of Southeast Asian Studies at Xiamen University, said that in stepping up as a responsible world power Beijing faced a dilemma over its approach to Iran.
“Chinese leaders have to painfully balance an impulse towards economic cooperation with Iran against other vital interests, including convincing Washington that China is a responsible stakeholder,” he wrote in the Journal of Contemporary China.
Saudi Aramco's Ras Tanura oil refinery. The country is China’s second-largest oil supplier after Russia. Photo: Reuters
Saudi Aramco’s Ras Tanura oil refinery. The country is China’s second-largest oil supplier after Russia. Photo: Reuters

Then there is China’s relationship with Iran’s chief adversary, Saudi Arabia, to consider. Riyadh is China’s second-largest oil supplier, behind Russia, and it plays a central role in Beijing’s energy strategy.

According to International Trade Centre data, more than 12 per cent of China’s imported oil came from Saudi Arabia last year, compared with just 6 per cent from Iran. Last year, Saudi Arabia shipped 56.73 million tonnes of oil to China, or 1.135 million barrels per day.

Why would Kim Jong-un trust Trump, now that he’s ripped up Iran’s nuclear deal?

This April, China imported 6.3 million tonnes of oil from Saudi Arabia, nearly twice the 3.24 million tonnes it imported from Iran, according to China’s General Administration of Customs.

Iran’s comparatively small share of China’s oil imports market and its heavy reliance on China as a trading partner add up to a deeply uneven relationship, experts say, and it is this imbalance that will encourage the US that China may be open to rethinking its ties.

As Jon Alterman, director of the Middle East programme at Washington DC think tank the Centre for Strategic and International Studies, pointed out, while China was Iran’s largest trading partner, Iran represented less than 1 per cent of China’s international trade.

“Iran needs China,” Alterman said. “But to China, Iran is expendable.”

Source: SCMP

15/06/2019

Lessons from an old trade war: China can learn from the Japan experience

  • In the last half of the 20th century US worries about a rising Japan led to tariffs and technology mistrust
  • Differences in the Chinese experience may predict a different outcome
Toshiba was one of the companies affected by US actions to prevent the rise of Japan in a trade war that echoes in today’s tensions between the US and China. Photo: Reuters
Toshiba was one of the companies affected by US actions to prevent the rise of Japan in a trade war that echoes in today’s tensions between the US and China. Photo: Reuters
If history is a mirror to the future, the similarities between the spiralling technology stand-off between China and the US and the economic wars waged by the US with Japan – which peaked in the 1980s and 1990s – may be instructive. But there are differences between the two which may predict a different outcome.
The US-Japan economic tensions started in the 1950s over textiles, extended to synthetic fibres and steel in the 1960s, and escalated – from the 1970s to 1990s – to colour televisions, cars and semiconductors, as Japan’s adjusted industrial policy and technology development moved it up the industrial chain.
Boosted by government support, Japan’s semiconductor industry surpassed the US as the world’s largest chip supplier in the early 1980s, causing wariness and discontent in the US over national security risks and its loss of competitiveness in core technologies.

The Reagan administration regarded Japan as the biggest economic threat to the US. Washington accused Tokyo of state-sponsored industrial policies, intellectual property theft from US companies, and of dumping products on the American market.

The US punished Japanese companies for allegedly stealing US technology and illegally selling military sensitive products to the Soviet Union. It also forced Japan to sign deals to share its semiconductor technologies and increase its purchases of US semiconductor products.

“The Trump administration is using similar tactics against China that were used against Japan in the 1980s and 1990s,” said an adviser to the Chinese government, on condition of anonymity, adding that the US was continuing its hegemony to curtail China’s tech development and was trying to mobilise its allies to follow suit.

After talks to end the US-China trade faltered last month, Huawei – a global leader in the 5G market – is now standing at centre stage of a protracted technology stand-off between Beijing and Washington, which has grown increasingly wary of the rising competitiveness of Chinese tech companies.

Zhang Monan, a researcher with the Beijing-based China Centre for International Economic Exchanges, does not foresee an easing of the rivalry between the US and China.

“The current US-China conflicts are more complicated than those between the US and Japan,” she said.

“The US will only get more intense in its containment of China and the tech rivalry won’t ease, even if China and the US could reach a deal to de-escalate the trade tensions.”

Huawei is at the centre of a technology stand-off between Beijing and Washington. Photo: AP
Huawei is at the centre of a technology stand-off between Beijing and Washington. Photo: AP

Back in 1982, the US justice department charged senior officials at Hitachi with conspiracy to steal confidential computer information from IBM and take it back to Japan. IBM also sued Hitachi. The two companies settled the case out of court and Hitachi paid 10 billion yen (US$92.3 million) to IBM in royalties in 1983, while accepting IBM inspections of its new software products for the next five years.

Toshiba, a major electronics producer in Japan, and Norway’s Kongsberg Vaapenfabrikk secretly sold sophisticated milling machines to the Soviet Union from 1982 to 1984, helping to make its submarines quieter and harder to detect. This transfer of sensitive military technology in the middle of an arms race between the US and the Soviet Union was not revealed until 1986.

The US issued a three-year ban on Toshiba products in 1987 and the company ran full-page advertisements in more than 90 American newspapers apologising for its actions.

In 1985, the US imposed 100 per cent tariffs on Japanese semiconductors. A year later, in its five-year semiconductor deal with the US, Japan agreed to monitor its export prices, increase imports from the US, and submit to inspections by the Office of the United States Trade Representative.

A display of chips designed by Huawei for 5G base stations on show at the China International Big Data Industry Expo. Photo: AP
A display of chips designed by Huawei for 5G base stations on show at the China International Big Data Industry Expo. Photo: AP

This was followed by a second five-year semiconductor deal in 1991, in which Japan agreed to double the US market share in Japan to 20 per cent. In yet another bilateral semiconductor deal in 1989 Japan was required to open its semiconductor patents to the US.

Meanwhile, the US government boosted its efforts to help American businesses cement their industrial leverage in the chip sector and unveiled rules to protect its domestic chip industry.

The two countries were irreconcilable in 1996 on how to measure their respective market share. Overall market circumstances had also changed by then, with the US becoming competitive in microprocessing, and South Korea and Taiwan emerging as strong rivals to Japan.

Its dominance in semiconductors lost, Japan reached out to Europe for a range of cooperative technology deals.

Cooperate, don’t confront: academic advises Beijing on trade war tactics

“History can tell that high technology matters greatly to national security strategies. It is not a process of mere market competition. It follows the law of the jungle,” Zhang said.

The US has intensified its investment scrutiny by rolling out the Foreign Investment Risk Review Modernisation Act last year, which extends the regulation to key industrial technology sectors.

Zhang predicted the US would continue to contain China’s technological development in key sectors such as AI, aerospace, robots and nanotechnology – all of which are of great importance to Beijing.

The US has said Chinese tech giants Huawei and ZTE present a national security risk. Last April it cut US supplies to ZTE, citing violations of sanctions against Iran and North Korea. The ban was removed three months later after ZTE paid US$1.4 billion in fines.

It was a wake-up call for China to develop its own core technologies. The subsequent US ban on Huawei added to the urgency to do so, observers said.

Wang Yiwei, a professor in international relations with Renmin University, said China had to develop its own hi-tech know-how while continuing the opening up process.

“China has paid a price to learn whose globalisation it is,” he said.

“We may see some extent of disengagement with the US in technology and dual-use sectors, but China can speed up cooperation with European countries, and other countries such as Israel, to offset the risks from the US.”

In December, the US filed criminal charges against Huawei and its chief financial officer Sabrina Meng Wanzhou, alleging bank fraud, obstruction of justice and technology theft.

The squeeze continued last month with the US blacklisting Huawei, restricting its access to American hi-tech supplies and putting pressure on its allies to freeze the company out of the 5G market. So far, those allies, including Germany and Japan, have remained hesitant about meeting the US request and refrained from siding with either country.

Chinese foreign ministry spokesman Geng Shuang said on Monday that Huawei had obtained 46 commercial contracts in 30 countries as of June 6, “including some US allies and some European countries that the US has been working hard to persuade out of the contracts”.

For Zhang, the differences between Japan’s experience of US concerns of technological advancement and China’s may offer some hope for Chinese ambitions.

“Dependent on US for security protection, Japan was limited in [its ability to] push back and was already a developed country,” she said.

“But China has huge domestic market potential to address the imbalance [between] economic and technology development. This remains a big attraction to multinational companies, which would enable China to integrate into global innovation and technology cooperation, but China has to figure out how to dispel the doubts on its growth model.”

Source: SCMP

18/05/2019

China hopes Iran nuclear deal “fully implemented”: FM

CHINA-BEIJING-WANG YI-IRAN-MEETING (CN)

Chinese State Councilor and Foreign Minister Wang Yi (R) meets with visiting Iranian Foreign Minister Mohammad Javad Zarif in Beijing, capital of China, May 17, 2019. (Xinhua/Yin Bogu)

BEIJING, May 17 (Xinhua) — China hopes to work with the Iranian side to eliminate complicated disturbing factors and make efforts for the full implementation of the Iran nuclear deal, Chinese State Councilor and Foreign Minister Wang Yi said on Friday.

Wang made the remarks when meeting with visiting Iranian Foreign Minister Mohammad Javad Zarif.

“China firmly opposes unilateral sanctions and the so-called ‘long-arm jurisdiction’ imposed by the United States on Iran,” Wang said, pledging to maintain the Joint Comprehensive Plan of Action, also known as the Iran nuclear deal, and safeguard the authority of the United Nations and basic norms governing international relations.

China welcomes Iran to actively take part in the joint building of the Belt and Road and hopes to strengthen mutually beneficial cooperation, Wang said.

Zarif praised China for its important role in defending the Iran nuclear deal and vowed to strengthen bilateral and multilateral coordination so as to safeguard multilateralism and common interests of the two countries.

Source: Xinhua