US exemption over Iranian oil trade shows China's power:Report

The US decision to exempt China from its unilateral sanctions over imports of Iranian oil reflected "China's power" and a "victory", a state-run Chinese daily said today, playing down Beijing's move to reduce oil imports from the Islamic Republic.

The US "decision has helped avoid direct diplomatic conflict and possible trade war between the two countries and is widely viewed as the result of compromise", Global Times said in an editorial titled 'sanctions exemption shows China's power'.

Questioning US policy of unilateral sanctions against Iran, it said: "the truth is the US has failed to achieve its desired goal of blocking Iran's oil exports. Many exempted countries haven't significantly reduced their oil purchases from Iran. At present, Washington appears to want to leave them well alone."

Admitting that China too has reduced Iranian oil imports, it said the exemption is a "satisfactory result that maintains China's interests, saves face, and avoids an impasse with the US. The result can be seen as a victory over the US."

"China should be more confident when dealing with the US in the future, be more determined when resisting pressure from the US, and tougher over compromise. We should speak out and voice our core interests and the bottom line, and not be too worried at the beginning about US reactions," it said.

However, Chinese experts said the exemption of China from the sanctions came as the country had "significantly reduced" its crude oil purchases from Iran.

"It probably only means the sanctions have been delayed, because no country can replace Iran to provide over 20 million tonnes of crude oil every year to China," Qu Xing, head of the China Institute of International Studies, told state-run Xinhua news agency.
China is Iran's third-largest oil importer, with a total of 27 million tonnes of the resource imported from the country in 2011. If the sanctions take effect in China, the world's second-largest economy will likely suffer tremendous loss.

However, US will fare poorly if sanctions are imposed against China's financial institutions, as the two economies are highly inter-dependent, with a two-way trade volume of USD 446.7 billion last year, Qu said.

In addition, the two countries have significant two-way financial investment. The top US banks all own equities in Chinese banks, while Chinese financial institutions have also invested heavily in US corporate bonds and equities.

As US financial businesses in China far outnumber those of China in the United States, the latter will face unaffordable loss if the former takes countermeasures against US financial sanctions, experts have warned, he said.

"It will be a lose-lose situation if the United States imposes sanctions against China," Qu said