Arabian Post Staff -Dubai
Every few months, a facility on the Yangtze churns out engines and chassis, which are sent to another plant for partial assembly. Those “knocked down” units are then packed into shipping containers bound for Iran. In return, Chinese entities receive shipments of Iranian copper and zinc. The exchange is structured so that Iranian exporters dispatch the metals directly to Chinese buyers, effectively settling the trade by commodity rather than currency.
Four people familiar with the arrangement say the process remains legal and relatively opaque. China’s Chery Automobile and the Tongling Nonferrous Metals Group are identified as central participants in this exchange network. While Chery is one of China’s largest car exporters, Tongling is a leading metals firm. The barter scheme often involves intermediary companies, logistics firms, and agent networks to manage documentation and movement of goods.
The revival of barter trade, though ancient in origin, signals fractures in the conventional global trade architecture. Sanctions on Iran have made dollar-based and banking-channelled transactions riskier and costlier. China, seeking reliable sources of copper and zinc, appears willing to circumvent those barriers by swapping manufactured goods for raw materials.
China’s demand for copper and zinc is growing. The country is the world’s top copper consumer, with the need intensifying in sectors like electric vehicles, grid infrastructure, and electronics. Some analysts suggest that supply disruptions, trade barriers and tariffs are pushing China toward more resource-secure models. Meanwhile, the global zinc market shows signs of tightness: inventories on the London Metal Exchange and the Shanghai Futures Exchange cover only a few days of consumption. Backwardation and blocked arbitrage between the two exchanges hint at stress in supply chains.
On the Iranian side, the scheme offers a pathway to monetise exports despite sanctions which limit access to international banking. Iran’s trade with China continues to flourish: in one recent quarter, non-oil trade between the two nations stood at nearly $6.94 billion. Chinese imports from Iran in that period exceeded $3.5 billion, and exports to Iran were nearly $3.4 billion.
Critics warn the system may usher in long-term distortions. Iran may end up reliant on China not only for trade flows but for pricing mechanisms and industrial pathways. For China, the deal ensures access to crucial inputs, but it also strengthens political and economic leverage over Tehran’s supply chains.
These barter-based exchanges align with broader strategic frameworks. Iran and China signed a 25-year cooperation pact in 2021 aimed at deepening collaboration across sectors including energy, infrastructure, and trade. That agreement envisages discounted oil supplies in exchange for Chinese investment. The barter of manufactured goods for metals could be viewed as a tactical implementation of that deeper alignment.
Also published on Medium.
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