China has issued a strong rebuke to new U.S. sanctions aimed at businesses in China and Hong Kong for their dealings with Iran, warning of retaliation and reaffirming its refusal to abandon cooperation with Iran. Foreign Ministry spokesman Lin Jian stated China would "take all necessary measures" to protect its interests, following U.S. Treasury Secretary Scott Bessent's announcement that any entity facilitating "money laundering or sanctions evasion on behalf of Iran risks being cut off from the U.S. financial system." This move is part of the "economic D-Day" against Iran declared by U.S. President Donald Trump.
Analysts highlight several reasons for China's defiance. Historically, China has been Iran's largest trading partner, purchasing about 90% of Iran's exported oil, which represented about 12% of China's total crude imports before recent disruptions. While China's imports of Iranian crude have fallen by 48% due to the Strait of Hormuz blockade and Houthi attacks, Beijing has significant oil inventories, estimated at 1 billion to 1.4 billion barrels, providing a buffer against supply disruptions for several months. Experts like Neil Quilliam of Chatham House suggest that disruption elsewhere could make Iranian crude even more valuable to China, making compliance with U.S. demands less likely. The U.S. also seeks access to critical minerals from China, providing an incentive to maintain a stable relationship.
Furthermore, China views unilateral U.S. sanctions as illegitimate and has consistently shown resistance to them, in contrast to multilateral or international sanctions. Despite the U.S. threats, some analysts, such as Trita Parsi of the Quincy Institute, believe that sanctioning Chinese entities over trade with Iran is unlikely to fully materialize, especially given the impending visit of Chinese President Xi Jinping to Washington. Parsi notes that Beijing's actions, like halting oil purchases during the height of the war to prevent a global recession, indirectly benefited the U.S. by stabilizing oil prices. While China aims to remain within the dollar system, critical for its trade, it is also actively seeking to diversify from dollar-centered finance, as evidenced by its Cross-Border Interbank Payment System (CIPS), though the U.S. dollar still dominates global payments. China is expected to use measures like rare earth controls to retaliate against sanctions on its major businesses.
