By Dr. Saman Shali
Following the political transition, which China opposed in 2003, China became extensively involved in Iraq's economy, reaping what the US and the allies sow. China has grown in importance in the Iraqi economy and the Kurdistan Region. Here are some of China's previous influences on the Iraqi economy and the Kurdistan Region:
1. Infrastructure Investment: China has significantly invested in developing Iraq's infrastructure. This investment covers initiatives in telecommunications, transportation, and energy. For instance, Chinese businesses have constructed oil infrastructure, highways, and power plants.
2. Cooperation in the energy sector: Energy is critical to China's involvement in Iraq. Thanks to several agreements China has struck with the Iraqi government to import oil, Iraq is one of China's primary sources of crude oil. Chinese businesses have also worked on oil development and exploration projects in Iraq and other Kurdistan Region of Iraq locations.
3. Balanced Trade Relations: China is one of Iraq's most important trading partners. Iraq exports oil to China, and China imports various items from Iraq. The trading partnership has developed over time, benefiting both countries' economies. In June 2023, China exported $1.4B and imported $2.25B from Iraq, resulting in a negative trade balance of $855M. Between June 2022 and June 2023, the exports of China have increased by $174M (14.2%) from $1.22B to $1.4B, while imports decreased by $-410M (-15.4%) from $2.66B to $2.25B.
4. Political and Diplomatic Relations: China has maintained diplomatic relations with Iraq and is involved in the country's political scene. It has stated that it supports Iraq's sovereignty and territorial integrity. Because of its non-interference in politics, China has become an extremely significant partner to Iraq. It opened a consulate in the Kurdistan Region due to the importance of the region economically to China.
5. Economic Relations in the Kurdistan Region: Chinese corporations have been active in various economic operations in the Kurdistan Region, including oil exploration, communication, exporting cars, electrical goods, and infrastructure projects at low prices, challenging all the goods from other countries in the market. These investments have influenced the local economy, creating job opportunities. These days, they are increasing their economic influence in the Kurdistan region market as the primary partnership.
6. Debt Relief: China has been involved in debt relief initiatives for Iraq, helping the country manage its financial challenges. Debt relief agreements have been reached, which have eased Iraq's financial burdens. However, in the long run, it will affect the debt of Iraq.
7. Technology and Telecoms: Chinese technology companies have entered the Iraqi telecoms sector, providing low-cost mobile networks and other communication infrastructure equipment and services that dominate the market.
8. Proposed The Silk Road Project: This is one of the most critical projects that China is attempting to persuade Iraq to build, and it runs from the port of Al-Faw across Iraq, including the Kurdistan Region, to Turkey and Europe. This project will connect Iraq to Europe and create many opportunities, enhancing its strategic importance and geographical position and transforming Iraq into an important center market.
It is vital to note that China's economic and political involvement in Iraq has sparked widespread worry and controversy. Some are concerned about the possibility of overdependence on China. Others, on the other hand, see it as a chance for economic expansion and growth. As Iraq's demand for high-quality items grows, geopolitical and economic conditions can shift quickly.
Saman Shali has a Ph.D. in Science (1981) from the University of Sussex. Dr. Shali worked as an Assistant Researcher and Assistant Professor at the University of Sussex, King Saud University, and Pennsylvania State University. He is also a senior fellow at the Mediterranean Institute for Regional Studies.