China has warned that it will take necessary measures to protect its legitimate rights and interests as the United States prepares to unveil a new and potentially sweeping sanctions package against Iran. Beijing’s response has placed the world’s two largest economies on a collision course over Tehran’s oil exports, financial networks and access to international trade.
The message was issued on Monday, August 24, after US President Donald Trump announced an “economic D-Day” for Iran. The US administration has characterized the envisaged sanctions campaign as a campaign of unprecedented scale which would seek to isolate Iran economically in order to make Tehran modify its stance on its nuclear program, regional activities and control over sea routes. The US government has not revealed its sanctions campaign package yet. However, the head of the Treasury Department, Scott Bessent, claimed that Washington would impose the “toughest sanctions ever” while appealing to America’s allies and China to support America’s anti-Tehran campaign.
The primary target at the moment is China since China is Iran’s biggest customer of its oil exports, as well as the final destination of Iran’s seaborne oil exports. As reported by Reuters citing data published by the energy-analytics firm Kpler in 2025, more than 80% of Iran’s seaborne oil exports were delivered to China. The Chinese independent refineries have kept purchasing the cheaper Iranian oil despite the threat of US secondary sanctions. Thus, the conflict between the US and Iran has now transformed into a three-way conflict between America’s sanctions machinery, Tehran’s efforts to preserve its revenues and China’s resistance against what it perceives as economic coercion.
Beijing rejects unilateral pressure
Chinese Foreign Ministry spokesman Lin Jian has opposed the US demand that China join the economic campaign against Iran. Beijing’s position is that sanctions imposed without United Nations Security Council authorisation lack a legitimate basis under international law.
Lin has argued that economic pressure will not resolve the dispute and may instead intensify the crisis.
“Sanctions and pressure will not help resolve the issue,”
Lin said, while urging all sides to pursue dialogue and negotiations. He also warned that military action, sanctions and coercive pressure could escalate tensions and serve no party’s interests.
The most recent declaration from China that it would defend its interests is well thought out and has political significance. Beijing has not issued any concrete form of retaliation, nor has it declared that it will defy every move the US makes in the future. However, through the choice of words, the US has communicated that it will not automatically comply with the order to sever all commercial ties with Iran.
The declaration from Beijing is also informed by China’s historic opposition to the application of US law as a means of controlling entities and countries outside the borders of the US. The sanctions framework adopted by the US allows it to penalize entities from other countries if they deal with a sanctioned nation. The Chinese have often made this argument during disputes regarding Iran, Russia, and other nations under US sanction. China is opposed to the use of the dollar-dominated financial system as a geopolitical tool against nations who do not align with US foreign policy goals.
Washington escalates economic warfare
President Donald Trump has offered the new sanctions approach as the alternative way instead of taking the war route. This is because the tough sanctions on the country’s financial sector will ensure that the government becomes weak. Such sanctions will not only prevent the country from financing military activities, but will also make it impossible for the Iranian government to fund its proxy military fighters. According to President Trump, any entity that helps Iran financially in any way faces the danger of facing heavy penalties. Trump said in a statement that
“any country, any airline, any corporation, any bank, or any government entity which facilitates Iran financially is going to suffer tremendous Economic Consequences.”
Bessent has reiterated this threat by noting that those continuing to do businesses with Iran have to decide between doing business with Iran and being part of US’ financial system. He also noted that the US treasury department will not spare any effort to target such entities. The entities include oil traders, shipping companies, insurance companies, port operators, exchange houses, banking institutions, and fronts.
The Treasury Department has already sanctioned smaller Chinese and Hong Kong-based entities accused of processing billions of dollars in Iranian oil revenue and assisting weapons procurement. It has also warned two major Chinese banks that they could face secondary sanctions if Iranian funds are moved through their financial systems, although Washington has stopped short of designating those banks.
That distinction is important. Sanctioning small companies would increase pressure while limiting the risk of a direct confrontation with Beijing. Designating major Chinese banks, however, could affect global trade and provoke a much wider economic response from China.
China’s oil relationship with Iran
It is also in energy that the importance of China to Iran lies. Iran has been heavily restricted in its oil exports for many years due to sanctions that followed the US decision to exit from the 2015 nuclear agreement. Independent Chinese refineries have become the main purchasers of Iranian crude. Unlike major state-owned companies engaged in energy business, these refineries known as “teapots” usually work outside the international supply networks. They are lured by the discounts available with Iranian oil and have figured ways to insulate themselves from US enforcement.
According to Kpler, China was importing on average 1.38 million barrels per day of Iranian oil in 2025, making it more than 80% of total oil exports of Iran. This stream of oil from Iran has been declining considerably under mounting US pressure. Reuters has reported that the estimates of Chinese purchases of Iranian oil amounted to 823,000 barrels per day in July 2026 and then fell to around 534,000 barrels per day in August. The offer of Iranian crude to Chinese buyers dropped while prices rose due to the disruption of oil streams caused by US pressure. There are some uncertainties in these figures as Iran and Chinese traders are using ship-to-ship deliveries, changing the names of vessels and turning off transponders. Nonetheless, according to Kpler, these data do not always show every movement of goods.
Despite that, one can see the drop and conclude that US blockade and threats of sanctions are already impacting Iran’s oil flows. This will have immediate effect on Tehran as lower exports mean less foreign currency revenues at the time when Iran needs them for imports, spending on public sector, and military actions. At the same time, access of Chinese refiners to cheap crude is also threatened even though China could find other sources of supplies.
Iran denounces “unjust sanctions”
Iran has responded with defiance rather than concession. Iranian officials have described the US campaign as economic warfare and rejected the argument that sanctions are designed to bring Tehran back to negotiations.
Parliament Speaker Mohammad Baqer Qalibaf said Iran must develop a strategy to overcome what he called “unjust sanctions.” He argued that Tehran should strengthen economic cooperation with neighbouring countries and expand the use of national currencies in bilateral trade to reduce dependence on the US dollar.
Iranian Foreign Minister Abbas Araghchi also dismissed Washington’s latest initiative as a repetition of earlier pressure campaigns.
“We have seen this movie before. Same bull. Different bullies,”
Araghchi said.
Iranian officials have threatened a severe response to any new US action. Reuters reported that Tehran described its reaction to further threats as “devastating.” Iranian officials have also warned that countries implementing or assisting the sanctions could be treated as participants in the conflict.
Iran’s strategy is based on the assumption that maximum pressure has not previously achieved its stated political objective. The country has continued to export oil through informal networks, maintain trade with China and Russia, and preserve its regional security partnerships despite decades of restrictions.
That does not mean sanctions have been ineffective. They have contributed to currency depreciation, inflation, declining investment, restricted access to technology and severe pressure on living standards. But they have not forced Iran to accept all US demands, and Tehran has repeatedly adapted its trade and financial networks.
Hormuz raises the stakes
This debate comes at a time when there is also pressure in regard to the Strait of Hormuz, which is one of the most crucial passages around the globe. This channel connects the Persian Gulf with other parts of the world and is a channel of a substantial share of oil as well as liquefied natural gas. The US hopes that this strait is opened for full commercial usage without any problems. But Iran plans to restrict passage through this channel and put some sanctions on vessels that do not follow their rules. Already some effects have been noticed in terms of the movement of tankers.
According to Kpler data, mentioned by Reuters, after mid-July there were no supertankers carrying Iranian crude moving through the strait. It is difficult to say anything about vessels whose transponders are turned off. All this leads to less Iranian oil for Chinese consumers. Also, there might be more dangers and problems for those ships moving from Iran and insuring these ships. In case of expansion of the crisis, it will affect not only exports of Iranian oil but also Gulf producers, Asian importers, tankers and insuring companies. China has a stake in keeping the strait open since this country is the main importer of crude oil.
A new US-China economic confrontation
The most consequential risk is that sanctions on Iran become another front in the US-China economic conflict.
Washington retains powerful leverage because most international banks and companies cannot afford to lose access to the US financial system. Even firms that do little business with the United States may avoid Iran to protect their global banking relationships.
Nevertheless, China has more options for resistance than smaller nations do. China is capable of using its domestic banks, alternative systems of payments, non-dollar transactions, and state-owned firms for selective trade with Tehran. Furthermore, China has the ability to retaliate against U.S.-based businesses and embargo strategic goods. According to some analysts, a possible clash may lead to consequences for rare earth minerals and other important supply chains. China has already used export restrictions and regulations as a weapon in its conflicts with Washington. Hence, a possible clash related to sanctions on major Chinese banks and energy companies may prompt retaliation from Beijing in relation to trade, technology, and strategic commodities. However, there are risks for the U.S. economy as well. Cutting Iran off from crude oil may increase world oil prices, as well as the cost of sea transportations and put extra strain on consumers. Washington may consider that political and strategic gains will be higher than such costs.
