China Tests Trump’s New Economic Squeeze on Iran
The Trump administration’s new economic campaign against Iran faces a major challenge in China, Tehran’s largest trading partner and leading oil customer. Washington is seeking to isolate Iran financially under “Operation Economic Outcast” but has so far avoided directly targeting major Chinese banks and companies.
China Complicates Trump’s Iran Sanctions Strategy
US Treasury Secretary Scott Bessent announced the latest campaign on August 24, imposing sanctions on nearly 60 Iran-linked individuals, entities and vessels involved in oil shipments, military programmes, cyber activities and sanctions-evasion networks.
Some China- and Hong Kong-based entities were targeted, along with a Chinese-owned tanker accused of transporting Iranian crude. However, Washington has stopped short of imposing major penalties on large Chinese financial institutions or state-linked companies.
China’s continuing purchases of Iranian oil provide Tehran with a crucial source of revenue, making Beijing central to Washington’s efforts to tighten Iran’s economic isolation.
Beijing Rejects US Secondary Sanctions
China has rejected Washington’s pressure campaign and described unilateral sanctions without United Nations authorisation as illegitimate.
Beijing maintains that its economic cooperation with Iran complies with international law and has warned that it will protect Chinese companies and national interests.
China could potentially reduce Iranian oil purchases without completely severing commercial ties, but Beijing has given no indication that it will fully comply with US demands.
Trump-Xi Summit Limits Pressure on China
Washington’s approach is complicated by President Donald Trump’s efforts to maintain a fragile trade truce with Chinese President Xi Jinping.
Xi is expected to visit the United States in the coming weeks, giving both governments an incentive to avoid another major confrontation.
Analysts therefore believe Washington may hesitate to impose sweeping Iran-related sanctions on major Chinese institutions before the Trump-Xi meeting, potentially limiting the effectiveness of its economic campaign against Tehran.
