Iran car maker criticizes China bank moves: report

TEHRAN (Reuters) - Chinese moves to cut back banking business with Iran are affecting cooperation between China's Chery Automobile Co and Iran Khodro, the Middle East's biggest car maker, its head was quoted as saying on Friday.

Due to U.S. pressure over Tehran's disputed nuclear plans, Chinese banks have reduced cooperation with their counterparts in the Islamic Republic, an Iranian Foreign Ministry official reportedly said early this month.

The United States, which is leading efforts to isolate Tehran over activities which Washington fears are ultimately aimed at making bombs, has urged international banks and companies to stop dealing with or investing in Iran.

Chery, a mid-sized but fast-growing Chinese car maker, said last August it had agreed to set up a $370 million assembly plant in Iran with two foreign partners, targeting Iran and neighboring markets.

Asked whether Chinese sanctions on "some" Iranian banks were having a negative impact on cooperation with Chery, Iran Khodro President and Chief Executive Manouchehr Manteghi told the ISNA news agency:

"This issue has had an impact because when you want to give a part of your market to another country, you expect more friendly behavior from the other side and when they take such actions it creates some question marks for us."

Under the August accord, Chery will hold 30 percent in the venture, Iran Khodro 49 percent and Canada-based investment company Solitac the rest. With a planned capacity of 200,000 units a year, it will assemble Chery QQ6 compact cars from kits.

Energy-hungry China has expanded commercial ties with Tehran in recent years and has been reluctant to impose tough economic sanctions on Tehran, the world's fourth-largest oil producer.

But Asadollah Asgaroladi, the head of the Iran-China chamber of commerce, said in early December that Iranian traders faced difficulties in opening letters of credit with Chinese banks, restricting a vital instrument in trade.

Iran says its nuclear program is a peaceful drive to produce energy, rejecting Western suspicions it is aimed at making bombs.

In 2007, Iran was China's third-largest supplier of crude oil, with volumes rising by 22.4 percent from the previous year.

But one Iranian analyst has told Reuters that if China was forced to choose between the United States and Iran, it would opt for the former as Beijing's U.S. business ties were far more extensive than those with Iran.

(Reporting by Zahra Hosseinian; Writing by Fredrik Dahl; Editing by David Cowell)