Since the establishment of diplomatic relations between Iraq and China in 1958, relations between the two countries have grown steadily in the twentieth century. Iraqi President Jalal Talabani and in June 2007, and the country’s Prime Minister in 2018 paid an official visit to China. (Photo quoted from Yahoo’s image)
The defeat of ISIS in late 2017 provided an opportunity for Iraqi officials to address reconstruction needs and economic problems. The reconstruction plan of the Iraqi central government also depends on the revival and expansion of the oil sector. 65% of GDP (GDP), the main part of the export income, and central government’s revenue are gained from oil.
To this end, Iraq is planning to expand its oil industry, and is eager to gain China's support for these efforts.
Iraq also needs Chinese money to develop its vital infrastructure. As, Adel Abdul Mahdi, the former Prime Minister of Iraq, previously signed several agreements in various sections, during his five-day visit to China. Iraqi politicians have focused on China to rebuild their country; to meet their financial and economic needs, in addition to attracting investment from Beijing.
In addition, the Iraqi oil sector is facing damaged infrastructure, as well as pipeline shortages and export capacity, to achieve new oil production targets of 6.9 million barrels per day by the end of 2023. Moreover, there are many problems in the way of supplying domestic demand. In this regard, the volume of trade is expected to increase to more than $ 500 billion in the next 10 years. China-Iraq relations have already improved in recent years, and trade with Iraq is about $ 30 billion. In addition, energy cooperation is the basis of bilateral relations.
On the other hand, in recent decades, China has been forced to increase its presence in the Middle East due to its economic growth. In 2015, China officially became the world's leading importer of crude oil, about half of which comes from the Middle East.
Iraq also has a good opportunity to invest, with oil exports of 3.6 million barrels a day. Iraq's oil reserves are among the largest in the world.
Iraq is the second largest member of OPEC after Saudi Arabia. Therefore, China is trying to expand its footprint in Iraq (with about 150 billion barrels of oil). China has invested more than $ 20 billion in Iraq (the largest investment in the Middle East), most of it in the oil sector.
China's energy strategy is the basis of its foreign investment in Iraq; China needs Iraqi oil and Iraq needs China’s money. Therefore, Beijing has put access to Iraqi oil on its priority.
In fact, Beijing intends to make the most advantage from Iraq's large market and, with its huge and long-term investments in oil and gas, as well as infrastructure, overtake all its regional and international competitors.
China is now Iraq's largest trading partner, and Iraq is one of the country's largest oil exporters. In addition, Chinese companies are leading energy investment in Iraq. Today, Chinese investors and oil exploration companies are present in infrastructures such as Iraqi power plants. In another phase, advanced negotiations are underway to build oil storage facilities for Iraqi oil in China and Pakistan (to transit to China).
What is clear is that the cornerstone of energy is the strategic partnership between China and Iraq. Energy has long been the bedrock of bilateral relations. In the meantime, while the prospect of $ 500 billion in trade may seem impossible and difficult, in the medium term, Sino-Iraqi relations will continue to be based on energy cooperation.
Farzad Ramezani Bonesh
Senior Researcher and Analyst of International Affairs
