China is Iran's most significant economic partner, with approximately 90% of Iran's 1.6 million barrels per day of crude oil exports going to China, generating tens of billions of dollars annually for Tehran. This robust trade relationship has continued even in the face of U.S. sanctions.
Chinese companies have been instrumental in supplying Iran with goods having potential military applications, including motors for Shahed drones, chemicals for rocket fuels, and electronics for various weapons systems. The Pentagon reported in December that China-based commercial satellite firms have engaged in business exchanges with Iran's Islamic Revolutionary Guard Corps. In one instance, two ships linked to an Iranian state company departed China carrying 1,000 tons of material usable for solid propellant in some 260 midrange missiles, and Iran reportedly ordered thousands of tons of missile fuel ingredients from China in mid-2025.
To circumvent sanctions, Iran has utilized a barter-like system where Chinese state-backed companies build infrastructure in Iran as compensation for oil, with an estimated equivalent of $8.4 billion in oil payments flowing through this conduit in 2024. A separate, secretive trade mechanism involving Chinese payments for Iranian oil with credits for Chinese goods has reportedly seen $2 billion to $2.5 billion pass through a special purpose vehicle over the last year, allowing Iran to purchase medicine, vehicles, and military gear. While China officially denies knowledge of such arrangements and claims strict control over dual-use items, small, commercially camouflaged Chinese firms have supplied precision aviation components to Iran through front companies.
Historically, China assisted Iran's nuclear program in the 1980s, helping develop the Isfahan nuclear-research complex. Although China now officially opposes Iran developing nuclear weapons, it has not directly supported Iran's nuclear program in recent decades, instead focusing on selling missile components and facilitating sanctions evasion for dual-use goods, according to a November report by the bipartisan U.S.-China Economic and Security Review Commission. The continued movement of ships from China carrying potential rocket fuel precursors after recent U.S. and Israeli attacks on Iran further underscores these concerns.
