China’s Calculated Risk: Why It Won’t Budge on US Sanctions Against Iran

The Shanghai Cooperation Organization (SCO) summit in Bishkek, Kyrgyzstan, has highlighted Beijing’s willingness to defy Washington’s economic sanctions against Iran. While the US views its measures as a powerful tool for coercion, China’s stance is rooted in a pragmatic assessment of its interests and capabilities.

China’s decision to stand by Iran is not driven by ideological solidarity or a desire to provoke the US; it’s simply a matter of self-preservation. By purchasing 90% of Iranian oil exports, Beijing has kept the Iranian economy afloat while evading sanctions through complex networks of “dark fleets” and private refineries. This allows China to maintain its energy imports from Iran and sends a message to Washington that it will not be intimidated by economic pressure.

The US may claim that its sanctions are designed to isolate Iran, but in reality, they have been toothless against Chinese companies and banks. These entities often settle transactions in renminbi or through barter, making them immune to US extraterritorial jurisdiction. Meanwhile, those using US dollars are hidden behind layers of shell companies, forcing Washington into a game of regulatory whack-a-mole.

Washington’s options for pressuring China are limited. Sanctioning major Chinese banks and companies would invite retaliation from Beijing, which is not in the US’ best interest given its own economic vulnerabilities. The looming war with Iran and the midterms make picking a fight with China an unwise move.

China’s broader geopolitical calculus explains why it risks antagonizing the US by standing by Iran. A defeat for Iran could have far-reaching consequences for Chinese interests in the region, as regional countries would be forced to seek refuge under Washington’s security umbrella. This would complicate future cooperation on advanced technologies and threaten China’s energy imports.

A victory for Iran, while potentially emboldening Beijing’s allies, also risks driving a wedge between China and the Gulf states. This could undermine years of Chinese diplomatic efforts aimed at bridging the divide and jeopardize Beijing’s growing influence in the region.

China is not eager to be seen as a full-throated supporter of Iran but is equally wary of being pushed into a tight alliance with Tehran. The fact that Iranian President Masoud Pezeshkian has yet to be invited to Beijing speaks volumes about China’s caution. At the SCO summit, Chinese leader Xi Jinping met with his Russian and Indian counterparts but did not have a formal meeting with Pezeshkian.

This calibrated distance is a deliberate message from Beijing: while it values its relationship with Iran, it will not compromise its relations with the US or other key players in the region. This balance is crucial for China’s foreign policy, which seeks to navigate complex alliances and rivalries without provoking a full-blown confrontation.

The China-Iran relationship is far more nuanced than Washington’s simplistic “with us or against us” ultimatum would suggest. Beijing’s decision to defy US sanctions is not driven by ideology but by a pragmatic assessment of its interests and capabilities. As the US continues to pursue its own agenda in the Middle East, it would do well to remember that China will not be swayed by economic coercion or diplomatic pressure. The stakes are too high, and Beijing’s calculus is far more complex than any simple game of geopolitical chicken.