Chinese Businesses Await More Certainty As Iran Truce Brings Calm

Iran and the United States may have entered a temporary ceasefire, but uncertainty over the agreement continues to cast a shadow over the operations of Chinese businesses across the Gulf region.

While the deal has raised hopes that business activity could gradually resume, many traders and investors remain reluctant to make long-term commitments.

For Abbas Shi, a Chinese businessman who has been helping connect Chinese companies with Iranian partners since 2024, the immediate priority is clearing a backlog of orders, not new business.

“The first thing everyone wants is to get all the cargo that’s been sitting at sea or waiting to be shipped moving again,” he said.The interim accord reached between Washington and Tehran included a 60-day ceasefire, a waiver allowing Iran to export oil during that period and the reopening of the Strait of Hormuz.

The two sides also approved a framework to negotiate a broader deal covering Iran’s nuclear programme, sanctions relief and the long-term reopening of the strait.

Before the truce, Iran’s blockade of the waterway had sharply curtailed commercial shipping through one of the world’s most important energy corridors, disrupting global supply chains and driving up transport costs.

“Demand will definitely come back. Post-war reconstruction will require huge amounts of materials,” Shi said. “We’d much rather ship by sea because it’s the cheapest option, but shipping through the Strait of Hormuz still hasn’t resumed.” In the meantime, companies have been forced to rely on rail freight. “There’s no rail capacity left in June and July is almost fully booked as well,” Shi said. “Rail simply can’t handle the volume we need. Freight rates have already climbed to nearly US$9,000 per container.” Despite the diplomatic breakthrough, Shi remained sceptical.

“The biggest question is whether Trump will actually follow through,” he said. “Most businesspeople here don’t really believe these terms will be accepted.

Honestly, it feels like all three sides are putting on a show.” Shi estimated that about 80 per cent of Iran’s consumer economy had been affected by the conflict, with many businesses closing or laying off workers.

“Outside basic necessities and agriculture, almost every sector has been hit,” he said. “The Iran-China Chamber of Commerce is now trying to establish ties with Chinese provincial commerce departments to encourage more Chinese investment, using barter trade and even the oil trade to facilitate financing.”

Kevin Zhao, an exporter from Yiwu, a city in Zhejiang province, who sells small household appliances to Iran and Azerbaijan, shared similar concerns.

The 32-year-old began exporting products, including hair curlers and hair dryers, to West Asia in 2023, generating annual sales of more than 1 million yuan (US$147,136). But he has largely walked away from the Iranian market, shifting more of his business towards the Caucasus and Central Asia.

“I’ve basically given up on Iran for now,” Zhao said. “It’s a small business to begin with. After the rial depreciated earlier this year, consumers there were already spending much less. Now there are simply too many uncertainties surrounding peace.” Since the war broke out on February 28, disruptions in the Strait of Hormuz have driven shipping costs sharply higher and significantly reduced vessel traffic. While the latest agreement placed the restoration of commercial navigation at the centre, logistics companies said confidence would take much longer to recover.

Ken Chung, chairman of the Chamber of Hong Kong Logistics Industry, said shipping companies were still in a wait-and-see mode because it was unclear whether Iran, the US and Israel would all honour the agreement.

“There is clearly a willingness to sit down and negotiate, and they’re talking about signing memorandums,” Chung said. “But it’s not just up to the US. Israel still appears to be carrying out sporadic attacks. If any side doesn’t truly stop, it’ll be very difficult to reach a lasting agreement.”

Even if a conclusive memorandum was signed, the industry would still be watching closely to see whether all parties complied, he noted, adding that security concerns around the strait and elevated marine insurance premiums continued to weigh heavily on logistics costs.

“The US clearly wants to stabilise the situation as quickly as possible and push the peace talks forward,” Chung said. “If all three sides genuinely move towards peace, it would create a much friendlier environment for everyone involved in shipping, logistics and trade.”