02/21/2013, 00.00
IRAN - CHINA
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As China is set to build high-speed rail, it overwhelms Iran's economy

Reports about the new railway come a few days after the international community renewed its sanctions against the Islamic Republic. In order to get around the embargo, Beijing barters oil for goods and services. However, anti-Chinese feelings are on the rise in Iran, as China's impact on its economy proves devastating for local businesses.

Tehran (AsiaNews/ Agencies) - China is taking advantage of Iran's disastrous economy for its own benefit, buying cheap crude oil in exchange for consumer goods and services rather than cash. The latest project involves high-speed rail.

Beijing's support for Tehran comes at a time when the United States and its allies are tightening their sanctions against Iran's refusal to abandon its nuclear programme.

Although not yet official according to Bloomberg, the latest deal involves a billion dollar contract to build high-speed railway line, two anonymous Chinese sources said.

Although China has become the Islamic Republic's main trading partner, for Foreign Ministry spokesman Hong Lei, who spoke yesterday, the two countries have maintained "normal business cooperation". In fact, China is the biggest buyer of Iranian crude oil, some 440,000 barrels a day.

By paying for the oil with cheap goods and services, Beijing has helped Iran bypass financial sanctions. However, this has meant that Chinese goods have flooded the Iranian market, giving China an advantage in Iran's weak economy, said Sino-Iranian expert Naser al-Tamimi.

This is in the case for the car industry. Chap Chinese imports have swamped the local market. China's main car manufacturers Geelran, Geely and Chery Motors are selling cars in Iran for a third of the price of their European competitors, but for consumers they are far lower in quality than those made in Europe.

China's takeover is also affecting state-owned firms charged with national projects. Over the past two decades, Chinese engineers have led countless infrastructural projects, like Tehran's subway.

"The new agreement seems to be, no more consumer goods. If we're going to barter, build us motorways, bridges and dams," said al-Tamimi.

Yet, the 70 Chinese businesses currently active in the country, each with its own Chinese employees, create almost no jobs in a country where unemployment is above 20 per cent.

One result has been a rising wave of anti-Chinese resentment.

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