As the Donald Trump administration presses ahead with tightening the economic and financial blockade on Iran, threatening countries that provide Tehran with any “form of lifeline” with “enormous economic consequences”, the success of the campaign appears to depend largely on how Beijing responds to US pressure.
According to 2025 data, Iranian oil exports to Chinese refineries account for more than 80% of Tehran’s total crude exports.
Data circulated by oil tanker tracking firms show that Iranian crude continues to flow into China, with some shipments recorded in trade data as originating from countries such as Malaysia and Indonesia. China’s General Administration of Customs has not reported direct imports of Iranian crude oil since 2022.
According to the same data, Chinese imports fell from around 1.6 million barrels per day in February this year, before the outbreak of the war, to approximately 800,000 barrels per day in July. They then dropped further in August, following the reimposition of the naval blockade on Iran, to around 530,000 barrels per day.
The question, therefore, is whether the United States can genuinely drive those exports to zero, or whether China will once again succeed in circumventing US sanctions, as it has previously done by continuing to buy Iranian crude through the “shadow fleet”, settling payments in yuan and activating China’s Blocking Statute, which allowed Chinese companies to disregard US sanctions.
Trump and Treasury Secretary Scott Bessent are portraying the new sanctions package, targeting aviation, maritime shipping, banks, gold, technology and cryptocurrencies, as something approaching an economic “Normandy landing”. Under the threat, any third country that dares assist Iran could be cut off from the dollar-based global financial system.
Yet in practice, the strategy amounts largely to a recycling of policies already tested and shown unable to break Iran’s willingness to withstand economic pressure. Their effectiveness has also become increasingly limited as states opposing Washington expand their ability to circumvent American measures.
At the heart of the plan lies a much more difficult question: whether the United States has the capability, or the political nerve, to confront the “elephant in the room”, namely China’s major banks and financial institutions.
That point is emphasised by several experts, including Richard Nephew, a former sanctions specialist and one of the leading architects of the pressure campaign against Iran.
Nephew argues that “the real pressure point is not necessarily the small banks processing Iranian payments directly, but the Chinese financial institutions dealing with those banks while simultaneously maintaining major interests in the US and global financial systems”.
Washington Targets Chinese Companies, but Not China’s Major Banks
On 24 August, the US Treasury Department announced an initial list of around 60 entities, including dozens of Chinese and Hong Kong companies, brokerage firms, logistics networks and organisations accused of assisting Iran.
Bessent, however, did not specify which countries or major financial institutions might be targeted next, nor did he offer a firm timetable for additional sanctions.
Asked about Chinese banks, he said: “We want to make clear today that nobody can be beyond the reach of US sanctions.”
The contradiction is that Washington has so far refrained from placing any major Chinese bank on its sanctions lists.
That suggests clear American hesitation, particularly ahead of the expected 24 September summit between Trump and Chinese President Xi Jinping, as announced by Washington.
The US administration regularly boasts of blacklisting dozens of peripheral entities, front companies and secondary networks each week. But it also understands that crossing the critical threshold of targeting China’s core banking sector could trigger a full-scale financial confrontation with Beijing.
Such a conflict would immediately affect the broader economic and commercial relationship between the two powers and could extend into technology restrictions, tariffs, rare earth supply chains and even Taiwan.
China has previously demonstrated its ability to use critical minerals and other economic tools in response to US pressure.
Any American retreat on Iran would mark the beginning of a strategic bill Washington would pay through the erosion of its global influence.
The US threat therefore appears aimed more at deterring China and changing its behaviour than signalling a genuine intention to punish Beijing directly.
Washington does have precedent. In 2012, the Treasury Department sanctioned Bank of Kunlun for providing “financial services to sanctioned Iranian banks”, effectively cutting it off from direct access to the US financial system.
Last week, during a meeting of G20 finance ministers in North Carolina, Bessent attempted to project an atmosphere of agreement between Washington and Beijing, claiming that areas of consensus over Iran outweighed areas of disagreement.
Events quickly contradicted that optimistic picture.
China’s rejection of unilateral US measures prevented the meeting from issuing a joint statement. China’s Foreign Ministry then warned against attempts to impose “long-arm jurisdiction”, stressing that the “reasonable concerns of all parties” must be respected.
China’s state-run Global Times was even more explicit.
In a sharply worded editorial, the newspaper described the so-called “economic landing” as a “desperate” American attempt to escape the quagmire of war in the Middle East.
“China has always opposed unilateral bullying and long-arm jurisdiction, not because China is Iran’s largest trading partner, but because accepting this American logic would mean international trade is no longer normal exchange between countries, but instead governed by rules drawn by America alone,” the editorial said.
It then asked: “If America can force China today to sever its relations with Iran, can it tomorrow sever any other country’s relations with the world?”
The newspaper concluded that “not only will China refuse to accompany America in these farces, but the international community will not stand with America either”.
Beijing Sees the Limits of American Pressure
Beijing appears to be assessing the boundaries of US power pragmatically, and there is little indication that it has any incentive to volunteer to rescue Trump from his predicament in the Middle East.
Nor does China appear willing to surrender access to discounted oil or abandon its broader economic cooperation with countries across the region.
Peter Harrell, an analyst at Georgetown University, told The New York Times that Trump previously faced two options: “either genuinely pressure China, which he does not want to do because of his economic agenda with Xi Jinping, or impose a naval blockade on Iranian tankers, which seemed easier than calling on China to stop trading with Iran under threat of sanctions against its major companies”.
So far, Harrell argues, neither option has produced the desired result.
Erica Downs, a senior research scholar at Columbia University’s Center on Global Energy Policy, told Voice of America that the possibility of the United States directly sanctioning major Chinese state-owned banks, such as the Industrial and Commercial Bank of China, is “extremely low”.
She noted that China’s largest banks have long distanced themselves from direct transactions linked to Iranian oil because of their concern over exposure to US sanctions.
However, if the US Treasury were to trace a chain of transactions and discover a connection between a major Chinese bank and Iran-related payments, Downs believes Washington would probably still hesitate to act.
There would be two reasons, she said: the impact on US-China relations and the potential consequences for the stability of the global financial system.
Nephew reaches a similar conclusion.
He argues that, in some cases, the United States already has “the necessary legal conditions to take action against Chinese financial institutions”, but retains policy discretion and can choose not to impose sanctions if doing so would damage America’s own economic interests.
Washington also wants Beijing to remain able to “continue using the dollar in conducting business”.
Excessive use of the financial weapon could therefore create risks for the United States itself.
The Three Tests of Washington’s Threat
In an analysis published by the Center for American Studies at Fudan University, researcher Sun Chenghao argues that if sanctions remain confined to individual companies and intermediaries, Washington and Beijing may still be “able to contain their disagreements within a certain range”.
He considers it unlikely that the United States would “risk” imposing sweeping sanctions on China.
Senior researcher Liao Minghui identifies three factors that will determine whether Washington’s threats carry real weight.
The first is whether the United States has the “courage” to extend secondary sanctions to major Chinese financial institutions, particularly if Beijing continues absorbing Iranian oil.
The second is “the extent to which Europe, Gulf states and Asian countries will cooperate”.
The third is the price of oil itself.
“The more successful the blockade becomes, the higher the risk premium in energy prices, which will hit the US economy itself as the midterm elections approach,” Liao argues.
If Washington fails to pass any of those three tests, he concludes, its threats “turn into empty political rhetoric”.
Can China Keep Buying Iranian Oil?
Chinese analysts broadly agree that Beijing is likely to maintain its rejection of US sanctions while continuing to purchase Iranian oil through informal channels and avoiding exposing its largest banks to direct confrontation with Washington.
That strategy, however, now faces a genuine test.
The naval blockade has already restricted the movement of Iranian tankers, without completely stopping them, making traditional sanctions-evasion mechanisms less effective.
At the same time, the more “effective” the blockade becomes, the greater the risk premium attached to energy prices. That, in turn, would affect the American economy itself and raises questions over whether a prolonged policy of economic strangulation can remain sustainable.
The central question therefore remains unresolved.
Will Washington continue relying on the naval blockade and sanctions against smaller entities, or will it dare cross the “red line” by targeting China’s major banks?
And if it does, will it be prepared to absorb the consequences of a direct financial confrontation with Beijing?
The 24 September summit may provide answers to some of these questions.
What appears certain, however, is that any American retreat on the Iran file would represent only the first instalment of a much larger strategic bill, one Washington would pay through a decline in its global influence.
