China has pushed back against growing pressure from the United States over its economic relationship with Iran, saying it will take necessary measures to protect its interests. The response came after the US imposed sanctions on several Chinese entities accused of dealing with Tehran and warned that a major Chinese financial institution could also face action. Beijing said its relationship with Iran should not be disrupted or undermined, signalling that it is unlikely to fully comply with Washington’s demands.
China remains Iran’s biggest buyer of oil and has provided Tehran with an important economic lifeline despite extensive US sanctions. The issue has become more complicated as the Trump administration seeks to increase economic pressure on Iran and push the country towards a deal. Beijing has little incentive to help Washington achieve that objective without receiving something significant in return, analysts said. At the same time, China has an interest in preventing the conflict from escalating into a wider regional or global crisis.
The ongoing conflict is also affecting the deployment of US military resources in Asia. The US recently moved its only Asia-based aircraft carrier towards the Middle East, while an exercise with South Korea was reportedly cancelled because of shortages linked to deployments around Iran. The shift could provide China with greater room to pursue its interests in areas such as the South China Sea and around Taiwan. For Beijing, continued US involvement in the Middle East could therefore have wider strategic implications beyond the Iran conflict.
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However, China may still consider limited concessions to avoid a direct economic confrontation with Washington. Beijing could reduce purchases of Iranian oil further, keep revenues from such transactions within Chinese financial institutions or strengthen controls over dual-use components that could potentially reach Iran’s weapons programmes. Such measures could allow China to demonstrate some cooperation without abandoning its broader economic relationship with Tehran. Beijing is also already purchasing less discounted Iranian crude as US pressure on Iranian oil supplies increases.
The dispute comes at a sensitive time for US-China relations, with Chinese President Xi Jinping and US President Donald Trump expected to meet in Washington on September 24 as both sides seek to preserve a trade truce. Neither country appears eager to trigger another major economic confrontation. China’s control over much of the global rare-earth supply chain gives Beijing significant leverage, while Washington also has tools that could hurt Chinese companies and financial institutions. US Treasury Secretary Scott Bessent has indicated that Washington wants to avoid measures that could cause wider disruption to the global financial system.
China also believes the US faces significant domestic and economic constraints. Chinese state media has criticised Washington over rising fuel prices, high national debt and economic uncertainty, arguing that the US is attempting to project strength by increasing pressure on a foreign adversary. Analysts said Washington may understand that Beijing is unlikely to completely follow its requests on Iran and could instead be seeking smaller concessions. China, meanwhile, has its own reason to favour stability because prolonged high energy prices and geopolitical uncertainty could weaken global demand for Chinese exports.
Any major Chinese concession on Iran would likely require a substantial US offer in return. Taiwan remains one of Beijing’s most sensitive issues, with Chinese officials repeatedly opposing US arms sales to the self-governed island. A US arms package worth about $14 billion is still pending, adding another potential point of contention between the two powers. At the same time, China is seeking a diplomatic role by holding discussions with Arab countries and engaging with regional leaders. With upcoming international meetings providing further opportunities for diplomacy, Beijing appears intent on protecting its relationship with Tehran while keeping its broader relationship with Washington from spiralling into another major confrontation.
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