Edited by: Darko Janjevic
China has pushed back on what it called "illegal unilateral sanctions" after the US announced new measures earlier this week to cut off all potential sources of revenue to Iran.
US Treasury Secretary Scott Bessent on Monday described the sanctions package as an "economic D-Day" against Tehran, and warned any economic engagement with the regime would "expose those responsible to the full reach" of US power.
China is Iran's top trade partner and provides a lifeline to Tehran mainly through oil purchases, but also with banking, technology and dual-use goods, which can be used both for civilian and military purposes.
When asked whether Chinese banks would be included in the new measures, Bessent warned that "no one was above the reach of US sanctions."
But with US President Donald Trump due to meet his Chinese counterpart Xi Jinping in September, Washington will need to be careful with any moves affecting China-Iran trade ties.
The initial US sanctions package stops short of targeting major Chinese banks. Instead, it focuses on 60 smaller entities, individuals, and vessels, both in mainland China and Hong Kong, that are part of the ecosystem supporting "illicit nuclear and missile technology procurement, cyber operations, and oil‑revenue generation networks."
China purchases up to 90% of Iranian oil exports, some of it through independent "teapot" refineries which end up rebranding the oil or using intermediaries to bypass US sanctions.
In May, China's Commerce Ministry ordered domestic businesses and teapot refineries to ignore US restrictions targeting several of these refineries. At the time, Bessent said China's Iran oil purchases amounted to "funding the largest state sponsor of terrorism."
On Tuesday, Chinese Foreign Ministry spokesperson Lin Jian said cooperation between China and Iran "has always been conducted within the framework of international law and should not be interfered with or disrupted."
China maintains a transactional relationship while framing instability in the Middle East as a failure of US policy. At the same time, Beijing also projects the image of a stable, responsible superpower, and avoids being lumped together with rogue states the US accuses it of supporting. Beijing also values its trade ties with Saudi Arabia and the UAE, prompting it to carefully balance its relationships to avoid alienating Iran's regional rivals.
The ongoing conflict in the Middle East and the US sanctions package are likely to be on the agenda when Iranian President Masoud Pezeshkian attends the Shanghai Cooperation Organization (SCO) summit in Kyrgyzstan, scheduled for August 31 to September 1. The SCO focuses on Eurasian security and is part of China's strategy of creating a "multipolar" world order to counter the global influence of the US.
China has been "trying to deepen its engagement and expand the scope of its relations with Gulf countries. From this perspective, Iran remains a useful and important partner for China, but it is not irreplaceable," William Yang, senior analyst for Northeast Asia at the International Crisis Group, told DW.
"In some ways, China benefits from Washington's continued involvement in regional security and defense and is not seeking to replace the US in that regard," Yang added.
However, US military setbacks during the Iran war have called this security umbrella into question and have changed the strategic landscape in the Middle East, Gu Xuewu, political scientist and director of the Center for Global Studies at Germany's University of Bonn, told DW.
"Against this backdrop, Beijing will not yield to US pressure to sever economic and trade ties with Iran or to help the US maintain its presence in the Middle East," Gu said.
Since the Iran war was launched in late February, Beijing has consistently called for a diplomatic solution to the conflict. This week, Foreign Ministry spokesperson Jian said that Washington's strategy of "economic asphyxiation" will fail to resolve the crisis and will only further intensify Middle Eastern tensions.
"China disapproves of the US' assertive behavior in this region, and is even less willing to accept the US using every means at its disposal to hinder cooperation between Arab states and China in the areas of energy, the military, science, technology, and trade," said Gu.
He added that Beijing has no interest in fighting a "decisive battle" with the US in the Middle East. "It is enough to provoke the US into making mistakes in the Middle East and to allow it to continue making further mistakes without interfering," he added.
In 2025, when the US tried to pressure China with massive tariffs, Beijing hit back by threatening to cut off the supply of rare earth minerals, forcing the Trump administration to retreat.
Since then, Trump has tried to stabilize the US-China relationship, including with a high profile summit in Beijingthis May. Now, Chinese leader Xi is due to visit Washington in September.
"Since Beijing and Washington are both focused on paving the way for the highly anticipated summit on September 24, I don't think either country will take drastic action on Iran to jeopardize the summit," Yang said.
However, he added that China will "maintain its baseline engagement with Iran and will be prepared to defend its economic interests if the US government begins to target Chinese businesses with secondary sanctions."
If the US hits large Chinese companies and banks with sanctions, then it is foreseeable that China will respond with equivalent retaliatory measures while maintaining its ties to Iran, says Professor Gu.
However, he added that Beijing will not "abandon the painstakingly negotiated plans for a summit."
"We will see China and the US on a collision course over the Iran issue, even as they engage in friendly discussions during the summit between Xi Jinping and Trump," Gu said.
Disclaimer: This report first appeared on Deutsche Welle, and has been republished on ABP Live as part of a special arrangement. Apart from the headline, no changes have been made in the report by ABP Live.
