Feb. 3 – China has promised to cancel 80 percent of Iraq’s debt or US$6.8 billion in a recent bilateral agreement signed by the two.

Iraq owes China US$8.5 billion in Saddam Hussein-era debt. Last year, China and Iraq finalized trade deals worth US$3.8 billion. Iraq’s Finance Minister Bayan Jabr said in a statement that the the write-off “will enhance economic cooperation between the two friendly countries.”

China’s close economic relationship with Iraq has led Chinese state-owned firm CNPC to have a strong presence in the country. The company bagged some of the most lucrative oil deals in the country namely the Halfaya field and Iraq’s biggest oil field Rumaila in Basra. CNPC is also involved in an oil field located south of Baghdad.

China’s first major investment in Iraq began in 2008 with the al-Ahdab oil field.