We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Sat 23 Feb 2008 01:35 PM

Font Size

- Aa +

Iran Khodro says business with China hit

Chinese moves to cut banking business with Iran affecting region's biggest car maker.

Chinese moves to cut back banking business with Iran are affecting cooperation between China's Chery Automobile Company and Iran Khodro, the Middle East's biggest car maker, its head was quoted as saying on Friday.

Due to US pressure over Tehran's disputed nuclear plans, Chinese banks have reduced cooperation with their counterparts in the Islamic republic, an Iranian Foreign Ministry official reportedly said early this month.

The US, which is leading efforts to isolate Tehran over activities which Washington fears are ultimately aimed at making bombs, has urged international banks and companies to stop dealing with or investing in Iran.

Chery, a mid-sized but fast-growing Chinese car maker, said last August it had agreed to set up a $370 million assembly plant in Iran with two foreign partners, targeting Iran and neighbouring markets.

Asked whether Chinese sanctions on "some" Iranian banks were having a negative impact on cooperation with Chery, Iran Khodro President and Chief Executive Manouchehr Manteghi told the ISNA news agency they were.

"This issue has had an impact because when you want to give a part of your market to another country, you expect more friendly behaviour from the other side and when they take such actions it creates some question marks for us," Manteghi said.

Under the August accord, Chery will hold 30% in the venture, Iran Khodro 49% and Canada-based investment company Solitac the rest. With a planned capacity of 200,000 units a year, it will assemble Chery QQ6 compact cars from kits.

Energy-hungry China has expanded commercial ties with Tehran in recent years and has been reluctant to impose tough economic sanctions on Tehran, the world's fourth-largest oil producer.

But Asadollah Asgaroladi, the head of the Iran-China chamber of commerce, said in early December that Iranian traders faced difficulties in opening letters of credit with Chinese banks, restricting a vital instrument in trade.

Iran says its nuclear programme is a peaceful drive to produce energy, rejecting Western suspicions it is aimed at making bombs.

In 2007, Iran was China's third-largest supplier of crude oil, with volumes rising by 22.4% from the previous year.

But one Iranian analyst has told newswire Reuters that if China was forced to choose between the US and Iran, it would opt for the former as Beijing's US business ties were far more extensive than those with Iran. (Reuters)

Arabian Business: why we're going behind a paywall