Iraq-China trade dates back to using the old Silk Road in ancient times. Over the past decades, China has gradually become an important economic player in the Middle East region. Iraq-China relations have grown steadily in the twentieth century since diplomatic relations between them was established in 1958. (Map quoted from Yahoo's image)
Following the defeat of ISIS in late 2017, the opportunity arose to begin Iraq's reconstruction and reduce the country’s economic needs and problems. Despite a plan to rebuild Iraq's central government, Iraqi politicians have also focused on China, to attract investment from Beijing, and also meet their financial and economic needs. The main part of the export revenue and central government revenue comes from oil. Iraq, with its damaged infrastructure (pipeline shortages and export capacity), is eager to expand its oil industry by gaining China's support.
In fact, the Iraqi government is trying to create an economic revolution with the help of China. In the meantime, signing about thirty agreements and memoranda of understanding between the two countries in the field of reconstruction, trade, energy, services and industries, agriculture, road construction and construction of bridges, hospitals, etc., and also investment in the field of construction, infrastructure and projects related to housing, the agreement to build large power plants, etc., have increased China's presence in all areas.
In contrast, Iraq's economy is very important to China. Iraq’s geographical location, its oil and gas resources, and significant wealth of the country (Iraqi oil accounts for 11 percent of world’s total oil) are important reserves for China. Iraq is also a consumer country with its imports being about three times of its exports. China is the largest oil importer from. Therefore, using various geopolitical factors and the necessary bases to play an effective role in the Middle East and the world, Beijing can take full advantage of the large Iraqi market and strengthen its place in the country with its huge and long-term investments.
Sino-Iraqi relations have improved in recent years, and economic cooperation is the basis of bilateral relations. The volume of trade is expected to increase to more than $ 500 billion in the next 10 years. Sino-Iraqi relations have improved in recent years, and economic cooperation is the basis of bilateral relations. In 2015, the two countries upgraded their relationship to a strategic partnership. In fact, China is now Iraq's largest trading partner, and Iraq is one of the largest exporters of oil to China.
According to the Chinese embassy in Baghdad, trade between China and Iraq in 2020 reached more than 30 billion and 200 million dollars, while in 2019, it was 53 billion dollars.
This decrease is due to the fall in world oil prices. China's exports to Iraq also declined during 2020 due to the consequences of the coronavirus pandemic. But it seems that with the prospect of cooperation between the two countries, this trend will increase rapidly. The volume of trade is expected to increase to more than $ 500 billion in the next 10 years.
What is clear is that the economy is the cornerstone of the China-Iraq strategic partnership. China needs Iraqi energy and Iraq needs Chinese money. Under these circumstances, Iraq is the best destination for China’s investment among the Arab countries, and Beijing with its investments can overtake all competitors. Under these circumstances, access to the $ 500 billion trade outlook may seem difficult, but important steps will also be taken.
Farzad Ramezani Bonesh
Senior Researcher and Analyst of International Affairs
