China is Iran’s top trading partner and one of the regime’s most important economic lifelines. Beijing is not seeking a wider Middle East war, especially one that threatens energy flows through the Strait of Hormuz. But it has provided Tehran with support that helps the regime absorb pressure, generate revenue, and sustain parts of its military-industrial base. This includes oil purchases, diplomatic cover, sanctions-evasion assistance, and reported dual-use transfers tied to Iran’s missile program. China’s approach is opportunistic: Beijing seeks to preserve Iran as a useful anti-American partner while limiting the risk to China’s own interests, especially the risk of provoking stronger U.S. action that could undermine the current U.S.-China trade truce.
1. China has thrown a lifeline to Iran’s embattled petroleum industry.
As Iran struggles to find excess stowage for its stalled oil exports, Beijing remains its best hope for relief. China purchases roughly 95 percent of Iran’s oil exports, much of which Iran must sell at a discount due to sanctions risk, saving Beijing nearly $4 billion annually. This trade is both enduring — China has been Iran’s top oil importer for the past six years — and strategically beneficial, with Beijing buying a record-high quantity of barrels during Tehran’s 12-day clash with Israel and the United States in June 2025.
Even amid the war, China has continued importing Iranian oil from tankers parked across Southeast Asia, where the crude is often transferred ship-to-ship near Indonesia and Malaysia before moving on to Chinese “teapot” refineries. As half of Iran’s total oil revenue is allocated towards funding its armed forces, China’s purchases are critical to funding the regime’s capacity to resist.
2. Chinese chemical shipments may be fueling Iran’s missile arsenal.
Despite being heavily targeted by American and Israeli strikes, Iran’s missile arsenal remains a potent weapon — and one that often relies on Chinese components. Beijing has previously supplied Iran with dual-use precursor chemicals vital to the regime’s ballistic missile program. In early 2025, China reportedly shipped more than 1,000 tons of sodium perchlorate — a key ingredient in the production of ammonium perchlorate, which is used in solid rocket fuel — to Iran.
Despite the Treasury Department sanctioning Shenzhen Amor Logistics and its logistical network for supporting the Islamic Revolutionary Guard Corps (IRGC) with access to key precursors, Chinese firms reportedly continued deliveries to Iran, including a potential shipment in April during the height of allied strikes on Iran’s chemical industry.
3. China underwrites Iran’s shadow economy.
Amid Operation Economic Fury, China remains integral to Iran’s capacity to access foreign funds and generate income to stave off the regime’s economic collapse. Chinese banks have long been embedded within Iranian money laundering and sanctions evasions networks. Smaller Chinese banks that lack access to the broader financial system, such as the Bank of Kunlun, or foreign banks operating under Chinese jurisdiction, are key nodes in laundering renminbi proceeds from Iranian oil sales.
China’s Cross-Border Interbank Payment System (CIPS), a clearing and settlement network, has experienced significant growth over the course of the conflict, with daily transaction values surging from $85 billion to $130 billion, a rise that coincided with reports of the regime demanding “toll” payments in renminbi to transit the Strait of Hormuz. However, Washington has begun to target this financial infrastructure, with Treasury Secretary Scott Bessent warning two unnamed Chinese banks of possible secondary sanctions over their ties to Iran and sanctioning Hengli Refinery, China’s second-largest teapot refinery.
4. China’s commercial satellite sector provides imagery to Iranian forces.
Iran’s strikes against American military assets in the region have likely benefited from intelligence gathered by Chinese-based commercial satellite providers, allowing Beijing to tacitly direct the war’s escalation dynamics via commercial contracts rather than forward deployments. Two Chinese firms, MizarVision and Empostate, have allegedly provided the IRGC with high-definition satellite imagery of U.S. assets and bases in the region being used to conduct strikes.
Moreover, this pattern of activity predates the current conflict. Another Chinese firm under U.S. sanctions, Chang Guang Satellite Technology, has been accused of providing images to Houthi forces in Yemen to target U.S. assets in the Red Sea during Operation Rough Rider in April 2025. Beijing has also supported the Houthis by tacitly allowing the Iranian proxy group to procure drones and missile development capabilities from Chinese suppliers.
5. China provides Iran diplomatic cover against U.S. pressure.
Beijing has shielded Tehran from diplomatic fallout while avoiding hard-power commitments that may upset its relations with other Gulf states. Chinese officials have long portrayed Iran’s nuclear sites as “peaceful” while insisting on the protection of Iran’s “rights” under the Nuclear Non-Proliferation Treaty, a subtle nod towards Tehran’s self-articulated “right to enrichment,” even while reportedly pressuring regime negotiators to moderate their position in ceasefire talks.
Buffered by its own substantial oil reserves, China vetoed a UN Security Council resolution intended to reopen the Strait of Hormuz, with China’s UN Ambassador objecting to American and Israeli strikes and expressing concern over potential escalation via U.S.-led escort or convoy operations. China has also condemned the ongoing U.S. blockade as a “dangerous and irresponsible” action that risks further conflict.
Craig Singleton is the senior director of the China Program and a senior fellow at the Foundation for Defense of Democracies (FDD). Jack Burnham is a senior research analyst at FDD. For more analysis from Craig, Jack, and the China Program, please subscribe HERE. Follow FDD on X @FDD. Follow Craig on X @CraigMSingleton. Follow Jack on X?@JackBurnham802. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.
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