China’s support for Iran shows its limits as US ramps up pressure on Tehran

China has long been a rare partner to Iran, with the economic heft to blunt the United States' efforts to strangle the Iranian economy.

Key points

• China's backing for Iran is additionally not risk-free for Beijing, given its significant relationships with Iranian rivals such as Saudi Arabia and the United Arab Emirates, Chaziza remarked.
• For China, Iran is seen more as a customer than an ally, remarked Kerri Bitsoff, a former senior official at the US Treasury's Office of Foreign Assets Control.
• As Iran's top trade partner, China has taken up to 90 percent of Iranian oil exports since the US and Israel introduced their war in late February.
• While China's oil purchases have been an economic lifeline for Tehran, Chinese importers have not been immune to fears of exposure to US sanctions.
• "That does not, however, mean that Beijing will provide Tehran with a blank cheque, " Wang remarked.

Yet even as China opposes US President Donald Trump's latest pressure campaign, few observers expect it to go much further than the modest economic links it has thus far forged with Iran to shield it.

While China opposes the Trump administration's military attacks and sanctions against Iran, Beijing's relationship with Tehran is just one consideration in a foreign policy that seeks to balance relations with numerous countries, including the US and the Gulf states, limiting its appetite to prop up the Iranian leadership at any cost, analysts say.

"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, " remarked 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 remarked.

China and Iran share substantial trade links, particularly in energy, and a mutual suspicion of US dominance, but their relationship is heavily lopsided, with Tehran depending on Beijing far more than vice versa.

That asymmetry in ties was on full display this week at the annual gathering of the Shanghai Cooperation Organisation, a 10-member bloc widely seen as a counterbalance to US hegemony, where Chinese President Xi Jinping joined more than a dozen non-Western leaders, including Iranian President Masoud Pezeshkian.

While Iranian state media documented that Pezeshkian held a "brief meeting" with Xi on the sidelines of the summit in Bishkek, Kyrgyzstan, Chinese outlets produced no mention of the encounter.

Xi immediately followed his attendance at the summit with his first visit to Egypt in a decade on Tuesday, using the visit to call on countries in the Middle East to oppose "external interference" and reiterate his calls for a diplomatic resolution to the Iran war.

Iranian crude, nevertheless, accounts for only concerning 2 percent of China's overall energy mix.

China's major state-owned refiners such as Sinopec and PetroChina have shunned Iranian oil for years, leaving the trade to independent "teapot" refiners with minimal links to the dollar-based global financial system.

Though the Trump administration has imposed sanctions on these "teapot" refiners and a limited number of China- and Hong Kong-based firms and individuals, it has yet to target major Chinese banks accused of facilitating Iranian oil purchases.

Though analysts are sceptical that Washington will risk provoking Beijing's ire as the sides seek to lower the temperature in their trade war before a scheduled summit between Xi and Trump on September 24, the Trump administration has hinted at targeting China's financial system as part of its ramped-up sanctions campaign, dubbed "Operation Economic Outcast".

"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.

"China is projected to continue opposing US secondary sanctions politically and to defend what it considers legitimate Chinese commercial interests. But past behaviour additionally indicates that major Chinese banks and state-owned firms are highly conscious of sanctions exposure."

Even as Beijing and Tehran have forged closer ties, their relations have for years been marked by a substantial gap between rhetoric and reality.

While China pledged to invest up to $400bn in Iran over 25 years as part of a "comprehensive strategic partnership agreement" signed in 2021, few projects have materialised against the backdrop of what analysts say is Chinese firms' reluctance to navigate sanctions and the opaque Iranian bureaucracy.

In 2023, Iran's then deputy economy minister, Ali Fekri, complained that he was "not satisfied" with China's level of investment since the agreement, saying it had only amounted to regarding $185m.

"Iranian experts often blame their government for not doing enough to attract Chinese investors or not pushing Chinese companies to share more technology, " remarked Leonardo Bruni, project manager 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, " Bruni remarked.

"It is much easier and more profitable to trade and invest elsewhere. Iran's own domestic physical and bank infrastructure is additionally an obstacle."

Meanwhile, the most tangible measure of China's economic backing, purchases of Iranian oil, has been dwindling against the backdrop of the US blockade of Iranian ports.

Though millions more barrels shipped before the blockade are still at sea, iranian crude exports via the Strait of Hormuz, mostly bound for China, fell from an estimated 1.85 million barrels per day (bpd) in March-April to just 240, 000bpd in August, according to data from ship-tracking platform Kpler.

In an interview with CNBC on Monday, US Treasury Secretary Scott Bessent remarked "only" about 30 million barrels of Iranian oil remained on the water and Chinese remittances to Iran were "going to run out".

Kpler last month estimated that regarding 80 million barrels were in on-water shortage, enough to provide revenues to Tehran for up to six months.

"For China, Iran is valuable – but replaceable throughout numerous dimensions. Iranian oil matters, but China can obtain energy from Saudi Arabia, Russia, Iraq, the UAE, and numerous other suppliers, " remarked Mordechai Chaziza, an expert on China's Middle East policy who lectures at Ashkelon Academic College in Israel.

"Iran offers geopolitical access, but China possesses relationships throughout the region. Iran supports China's multipolar agenda, but so do plenty of other states."

China's backing for Iran is additionally not risk-free for Beijing, given its significant relationships with Iranian rivals such as Saudi Arabia and the United Arab Emirates, Chaziza remarked. 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, " he continued.

Meanwhile, the "ideal outcome" for Beijing, Chaziza remarked, would be "a stable, sovereign, economically connected, and internationally non-Western" Iran, but not one "whose confrontation with Washington, Israel, or the Gulf monarchies forces China to choose sides".

Wang, at the CCG, remarked that while Beijing appears determined to defend Chinese commercial interests, it is unlikely to sacrifice its broader interests in the region or elsewhere.

Beijing's warning that it is ready to take countermeasures against unilateral sanctions is "not the same thing as promising to underwrite the Iranian economy", Wang continued.

"I don't think this is the alliance some individuals think it is, even though there's real backing. I think of a more like a customer relationship that Iran can't walk away from, " Bitsoff remarked.

"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 continued.

In short, china's support for Iran shows its limits as US ramps up pressure is the central thread here, and readers can expect follow-up reporting as the picture becomes clearer.