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Take wait-and-see approach to US sanctions

(Global Times)

08:33, June 28, 2012

Today marks the deadline of the US requiring other countries to stop making oil deals with Iran. Many have promised to cut imports of or stop buying oil from Iran so as to become exempt from US sanctions. China is so far the only big country that has not been granted a waiver. It will be interesting to see if the US piles sanctions on China's State-owned enterprises (SOEs) which still have oil deals with Iran.

China is unlikely to compromise with the US. Firstly, a large percentage of automobiles on China's roads use oil from Iran. Secondly, China adopts a friendly policy toward Iran.

Only a UN resolution can restrain China's stance toward Iran. Being a big country, China should maintain this bottom line.

But the US' influence is obvious. Its financial sanctions can harm Chinese companies. Confronting the US with a tough attitude is not the best choice for China. It's right for China to remain low-key in declaring its stance. Over the Iran issue, there is a distance between verbal declaration and real actions.

Similarly, the Obama administration does not want to punish China seriously because it will put the US economy at great risk. China has its own advantages. Once the US slaps sanctions on China's SOEs, some American companies in China will bear the consequences.

Obama knows full well that he should make a show of taking a tough attitude toward Iran to win the coming presidential election. But if a trade war occurs at this point, it also means the end of his political life.

The Chinese government should deal with the US' demand perfunctorily. China should neither collide with Obama nor promise anything to the US. Next, China should take it easy. If Washington launches large scale and substantial sanctions against China, it can only respond with countermeasures. It is a troubling, even annoying scenario. But if China cannot avoid it, it should face it squarely. The consequences of US sanctions may not be as fearsome as we had thought.

Many large State-owned companies have big investments in Iran. But a few SOEs are seemingly more conciliatory than the government. Some have stopped or cut trade with Iran. In this major issue, SOEs should support the national stake, not prioritize their own interests.

The teeth in Washington's sanctions largely rely on its control over the global financial system. When the sanctions are imposed, money transactions to Iran from overseas will be extremely difficult. Oil tanks carrying Iranian oil will not be able to find insurers.

Financial sanctions are choking Tehran. China needs the wisdom and strong will to respond to US sanctions. It cannot launch countermeasures until it feels ready. Besides trade, China needs substantial growth in financial power to resist US sanctions.

If Washington is compelled to find faults with China, it will be of no help to fear it. This is the philosophy China should have in dealing with the US.


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