China shields Iran from US sanctions via oil purchases and yuan trade

September 1, 2026 at 06:08 PM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

China buys 90 percent of Iranian oil exports, keeping Iran's economy afloat despite US sanctions. Beijing settles most Iran trade in renminbi or barter, insulating Chinese firms from US secondary sanctions. Washington faces a regulatory whack-a-mole as shell companies replace sanctioned entities.

Key Facts

China purchases 90 percent of Iranian oil exports, sustaining Iran's economy despite US sanctions.
Chinese banks and companies trading with Iran often settle in renminbi or barter, making them immune to US extraterritorial jurisdiction.
The Shanghai Cooperation Organization summit in Bishkek on August 31 called for a new development bank with maximum independence from weaponized financial systems.
The Chinese foreign ministry said China will do everything necessary to safeguard its rights and interests in response to US sanctions.

China's Sanctions Evasion

China buys 90 percent of Iranian oil exports, keeping the Iranian economy afloat. Beijing evades US sanctions through a network of dark fleets and teapot refineries that obscure the Iranian origin of cargo. Chinese banks and companies doing business with Iran often settle transactions in renminbi or through barter, insulating them from US secondary sanctions. The handful of Chinese companies still settling in US dollars hide behind layers of shell companies that can be discarded at little cost.

US Enforcement Challenges

Washington faces a regulatory whack-a-mole as each sanctioned entity is quickly replaced by another. The US could sanction major Chinese banks and companies with no Iran ties as a bargaining chip, but that would invite Beijing to retaliate. With the US economy strained by the war with Iran and midterm elections approaching, picking a fight with China is the last thing Washington needs.

SCO Summit Declaration

The Shanghai Cooperation Organization summit in Bishkek on August 31 brought together leaders of China, Russia, India, and Iranian President Masoud Pezeshkian. The final declaration issued on September 1 called for a new development bank with maximum independence from financial systems that weaponize economic tools. Russian President Vladimir Putin said the bank would have maximum independence from states that weaponize economic tools for unilateral advantages.