China’s support for Iran shows its limits as US ramps up pressure on Tehran | Business and Economy
China’s Relationship with Iran: A Complex Economic Dynamic
China has emerged as a crucial partner for Iran, using its economic influence to counteract American efforts to isolate the Iranian economy. However, experts caution that while Beijing opposes U.S. pressure tactics, it is unlikely to deepen its economic ties with Tehran beyond current levels.
Observers note that China’s relationship with Iran is one of many factors in its broader foreign policy, which emphasizes balanced relations with various countries, including the United States and Gulf states. Analysts, such as Hongda Fan, director of the China-Middle East Center at Shaoxing University, argue that China will not risk a direct confrontation with the U.S. over Iran. “Ultimately, the U.S.-Iran conflict must be resolved by the two countries themselves,” Fan stated.
Despite their shared opposition to U.S. dominance and considerable trade links—particularly in energy—Iran remains heavily dependent on China. This asymmetry was evident at the recent Shanghai Cooperation Organisation summit in Bishkek, Kyrgyzstan, where Chinese President Xi Jinping met with global leaders, including Iranian President Masoud Pezeshkian. While Iranian media reported on a brief interaction between the two leaders, Chinese state outlets did not mention the meeting.
Following the summit, Xi visited Egypt, where he reiterated the need for a diplomatic resolution to conflicts in the Middle East and urged nations to oppose “external interference.”
As Iran’s primary trading partner, China has accounted for up to 90 percent of Iranian oil exports since U.S. sanctions intensified in late February. However, Iranian crude oil constitutes only about 2 percent of China’s overall energy consumption. Although China’s oil purchases have provided significant economic support to Tehran, they also come with concerns about potential U.S. sanctions targeting Chinese importers. Major Chinese state-owned refiners like Sinopec and PetroChina have largely avoided Iranian crude, with trade primarily conducted by smaller, independent refineries.
Despite the Trump administration’s sanctions against these independent refineries and some Chinese firms, major Chinese banks—accused of facilitating Iranian oil transactions—have not yet faced similar penalties. The U.S. government has hinted at expanding sanctions to include China’s financial sector but analysts suggest that Washington is cautious about provoking further tensions ahead of a forthcoming summit between Xi and President Trump.
Zichen Wang, deputy secretary-general of the Center for China and Globalization, remarked, “The legitimate question is why third countries should adopt Washington’s unilateral economic policies against another sovereign state.” However, he emphasized that China will not provide unrestricted support to Iran: “Major Chinese banks and state-owned companies are highly conscious of sanctions exposure.”
Despite pledges from China to invest up to $400 billion in Iran as part of a strategic partnership agreement signed in 2021, tangible results have been limited. Iranian officials have expressed dissatisfaction with the level of Chinese investment, which amounted to approximately $185 million by 2023, according to Deputy Economy Minister Ali Fekri. Analysts point to a combination of sanctions and a complicated regulatory environment in Iran that discourages Chinese companies from entering the market.
Oil purchases, which represent Beijing’s most significant support for Tehran, have been declining due to U.S. blockades of Iranian ports. According to data from ship-tracking platform Kpler, Iranian crude exports, primarily bound for China, dropped from an estimated 1.85 million barrels per day in early 2023 to around 240,000 barrels per day in August.
Scott Bessent, U.S. Treasury Secretary, noted in a recent interview with CNBC that only about 30 million barrels of Iranian oil were currently on the water, suggesting that China’s financial support to Iran could diminish soon.
Experts suggest that while Iran holds value for China, especially in terms of geopolitical access, it is not seen as irreplaceable. Mordechai Chaziza, a specialist in China’s Middle East policy, stated that China can source energy from other suppliers like Saudi Arabia, Russia, and Iraq. “Gulf stability is vital, as China obtains roughly half of its crude imports from the Middle East,” Chaziza added.
While China maintains a complex relationship with Iran, it also recognizes the risks involved, given its strong ties with Iran’s regional rivals, including Saudi Arabia and the UAE. Any definitive support for Iran is likely to be closely balanced against China’s broader interests in the region.
In conclusion, while China’s support for Iran may seem robust, it is characterized more by economic pragmatism than by a deep-seated alliance. As Kerri Bitsoff, a former senior official at the U.S. Treasury, noted, “Iran is more of a customer than an ally” to China.
