Beijing’s support for Tehran is balanced against other relationships in the region, analysts say. China has long been a partner to Iran, possessing the economic capacity to mitigate the United States’ efforts to impact the Iranian economy. However, analysts do not expect China to extend beyond its current modest economic ties with Iran. While China opposes US President Donald Trump’s pressure campaign, its relationship with Tehran is one of many considerations in a foreign policy that aims to maintain balance with the US and Gulf states, which limits its willingness to support the Iranian leadership extensively.
“China, with broader global interests, can only actively promote de-escalation of the US-Iran conflict, and cannot and will not engage in fierce confrontation with the US for Iran’s sake,” stated Hongda Fan, director of the China-Middle East Center at Shaoxing University in China. “Ultimately, the US-Iran conflict must be resolved by the two countries themselves,” Fan added.
China and Iran maintain significant trade links, particularly in energy, and share a mutual suspicion of US dominance. However, the relationship is heavily skewed, with Tehran relying on Beijing more than the other way around. This imbalance was evident at the recent Shanghai Cooperation Organisation summit, where Chinese President Xi Jinping attended alongside various non-Western leaders, including Iranian President Masoud Pezeshkian. While Iranian state media reported a brief meeting between Xi and Pezeshkian, Chinese outlets did not mention the encounter.
Following the summit, Xi visited Egypt, calling on Middle Eastern countries to oppose “external interference” and reiterating his calls for a diplomatic resolution to the Iran conflict. China has become Iran’s top trade partner, taking up to 90 percent of Iranian oil exports since the US and Israel initiated military actions in late February. However, Iranian crude constitutes only about 2 percent of China’s overall energy mix.
Despite the economic lifeline provided by Chinese oil purchases, Chinese importers are wary of US sanctions. Major state-owned refiners like Sinopec and PetroChina have avoided Iranian oil for years, leaving the trade to independent refiners with limited connections to the dollar-based global financial system. Although the Trump administration has imposed sanctions on these independent refiners and some China- and Hong Kong-based firms, it has not targeted major Chinese banks involved in facilitating Iranian oil purchases.
The Trump administration has suggested it may target China’s financial system as part of its sanctions campaign, but analysts are skeptical that Washington will risk provoking Beijing, especially as both sides aim to ease tensions in their trade war ahead of a scheduled summit between Xi and Trump on September 24. “The legitimate question is why third countries should be expected to adopt Washington’s unilateral economic policy towards another sovereign state,” remarked Zichen Wang, deputy secretary-general of the Center for China and Globalization (CCG) think tank in Beijing. “That does not, however, mean that Beijing will provide Tehran with a blank cheque,” Wang added.
China is likely to continue opposing US secondary sanctions politically while defending what it considers legitimate Chinese commercial interests. However, past behavior indicates that major Chinese banks and state-owned companies are cautious about sanctions exposure. Even as Beijing and Tehran have strengthened ties, their relationship has historically shown a gap between rhetoric and reality. Although China pledged to invest up to $400 billion in Iran over 25 years as part of a strategic partnership agreement signed in 2021, few projects have materialized due to Chinese firms’ reluctance to navigate sanctions and Iran’s bureaucratic challenges.
In 2023, Iran’s then deputy economy minister, Ali Fekri, expressed dissatisfaction with China’s investment level since the agreement, noting it had only reached about $185 million. “Iranian experts often blame their government for not doing enough to attract Chinese investors or not pushing Chinese companies to share more technology,” stated Andrea Ghiselli, head of research at the ChinaMed Project. “However, the reality is that there is no point for Chinese companies to give up their ties with the international financial system to expand their business in Iran,” Ghiselli added. “It is much easier and more profitable to trade and invest elsewhere. Iran’s own domestic physical and bank infrastructure is also an obstacle.”
Meanwhile, the most concrete measure of China’s economic support, its purchases of Iranian oil, has been declining amid the US blockade of Iranian ports. Exports of Iranian crude via the Strait of Hormuz, primarily destined for China, dropped from an estimated 1.85 million barrels per day (bpd) in March-April to just 240,000 bpd in August, according to ship-tracking data from Kpler, although millions of barrels shipped prior to the blockade remain at sea. In an interview with CNBC, US Treasury Secretary Scott Bessent stated that “only” about 30 million barrels of Iranian oil were left on the water, and Chinese remittances to Iran were “going to run out.” Kpler estimated last month that about 80 million barrels were in on-water shortage, potentially providing Tehran with revenue for up to six months.
“For China, Iran is valuable – but replaceable across many dimensions. Iranian oil matters, but China can obtain energy from Saudi Arabia, Russia, Iraq, the UAE, and numerous other suppliers,” explained Mordechai Chaziza, an expert on China’s Middle East policy. “Iran offers geopolitical access, but China possesses relationships throughout the region. Iran supports China’s multipolar agenda, but so do many other states.”
China’s support for Iran carries risks for Beijing, considering its important relationships with Iranian rivals such as Saudi Arabia and the UAE. “Saudi Arabia and the UAE are major energy and commercial partners. Gulf stability is vital because China obtains roughly half of its crude imports from the Middle East,” Chaziza noted. The “ideal outcome” for Beijing would be “a stable, sovereign, economically connected, and internationally non-Western” Iran, but not one that forces China to choose sides in confrontations with Washington, Israel, or Gulf monarchies.
Wang, at the CCG, stated that while Beijing appears committed to defending Chinese commercial interests, it is unlikely to sacrifice its broader interests in the region or elsewhere. Beijing’s warning of potential countermeasures against unilateral sanctions does not equate to a commitment to underwrite the Iranian economy, Wang added. For China, Iran is viewed more as a customer than an ally, according to Kerri Bitsoff, a former senior official at the US Treasury’s Office of Foreign Assets Control. “I don’t think this is the alliance some people think it is, even though there’s real support. I think of it more like a customer relationship that Iran can’t walk away from,” Bitsoff said. “And it was good for China – they got cheap oil, they got a US tied up in the Middle East, but I think that only lasts up until the point where it threatens China’s other interests,” she added.