China Complicates Trump's Iran Sanctions Efforts with Oil Trade

US President Donald Trump's Iran sanctions have an unexpected problem: China. The sanctions aim to isolate Iran from the dollar-based financial system, but most of its oil trade moves through Chinese banks and renminbi-based networks.

In August, US Treasury Secretary Scott Bessent declared an 'economic D-Day' against Iran, promising the 'single greatest financial offensive ever marshaled against an adversary.' However, this campaign's success depends on China, which is a strategic rival to the US today.

The Trump administration's 'zero-leakage' policy requires foreign financial institutions to monitor and police their own customers. But achieving total isolation of the Iranian regime would necessitate Chinese banks doing much of the hard work of sanctions enforcement.

China purchased around 90% of Iran's oil exports before the closure of the Strait of Hormuz, according to a US Treasury estimate. The Iranian regime has pushed much of its trade into an alternative system capable of operating without the dollar, using the SWIFT interbank payments platform and correspondent banks that have given the US financial leverage.

Much of this trade moves through Iran's rahbar shadow-banking system, which processes 'tens of billions of dollars' worth of trade each year. This system is primarily used for oil and petrochemical sales, with most transactions settled in renminbi.