An economist warns of the continued dominance of the dollar in Iraqi-Chinese trade

  An economist warns of the continued dominance of the dollar in Iraqi-Chinese trade

Data from the Chinese Customs Authority showed a significant increase in the value of Chinese exports to Iraq during the first five months of 2025, increasing by 9.5% compared to the same period in 2024. The value of these exports reached $7.4 billion, compared to $6.77 billion during the same period last year, according to a report by economic expert Manar Al-Obaidi.

Al-Abidi explained that this growth is driven by increased exports from a number of sectors, most notably:

Electrical and mechanical appliances : accounted for 24% of total exports and achieved a growth rate of 11.46%.

Electronics : represented 15% of exports and increased by 29.3%.

Clothing : accounted for 7.6% of total exports and increased by 21%.

Cars and spare parts : Its share reached 7.2% and recorded the highest growth rate of 35%.

In contrast, Iraq i exports to China declined by 5.77% during the same period, reaching $15.2 billion compared to $16.14 billion in 2024, and are almost entirely limited to petroleum products.

Despite the decline, the trade balance between the two countries remains in Iraq's favor, with a trade surplus of $7.7 billion during the first five months of 2025, down from $9.37 billion during the same period the previous year.

Al-Obaidi pointed out that "this surplus remains fragile, as it is almost entirely tied to Iraq's oil exports to China in terms of quantity and price. Any decline in the value or volume of these exports could lead to a shrinkage of the surplus or its transformation into a deficit, which necessitates diversifying Iraq's export base by boosting exports of raw materials and local goods."

Although annual trade between Iraq and China exceeds $54 billion, financial transactions between the two sides continue to be conducted in the US dollar, whether for oil sales or imports.

Al-Obaidi called for "the establishment of a direct financial and trade exchange platform between Iraq and China, similar to what other countries have done, such as the recent agreement between China and Turkey to adopt local currencies in trade exchanges."

He promised that "reducing dependence on the dollar represents a strategic step towards enhancing financial independence and increasing the effectiveness of bilateral trade."

It should be noted that this data represents direct Chinese exports to Iraq and does not include goods exported to other countries, particularly the UAE, and then re-exported to the Iraqi market.  link