China orders firms to ignore US Iran sanctions, daring US to enforce crackdown
Chinese forced a direct test of Washington’s ability to apply pressure on Iran by instructing companies to ignore US sanctions targeting Iranian oil.
A new directive issued Sunday through China’s Ministry of Commerce refers to a 2021 “blocking law” that bans firms from complying with foreign sanctions deemed illegitimate. The order applies to many Chinese refiners, including large independent processors known as “teapot” refineries that have been accused by the United States of buying Iranian crude.
The move represents a shift from years of opaque workarounds to more open state-backed resistance, as Beijing signals it will not cooperate with U.S. efforts to cut off a key source of Iranian revenue.
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“This is unprecedented. This is a huge escalation in terms of China’s response to US economic statecraft. This is a measure of Beijing’s defiance,” said Max Meizlish, a research fellow at the Foundation for Defense of Democracies.
Rising tensions Trump administration Intensifies sanctions campaignIt targets Chinese refiners and warns financial institutions that they could face penalties for facilitating oil transactions between Iran and China.
President Donald Trump shakes hands with Chinese President Xi Jinping during a bilateral meeting at Gimhae International Airport during the Asia-Pacific Economic Cooperation summit in Busan, South Korea, on October 30, 2025.
(Reuters)
Treasury Secretary Scott Bessent He accused Beijing of effectively financing Iran’s military activities through oil purchases, arguing that Chinese demand supports Tehran’s economy.
“China, let’s see they step in with some diplomacy and get the Iranians to open the strait,” Bessent said in an interview on Fox News on Monday. he said.
“Iran is the largest state sponsor of terrorism… China buys 90 percent of their energy, so they are financing the largest state sponsor of terrorism,” he added.
Despite growing pressure from the United States, China remains the primary destination for Iranian crude, and the bulk of the country’s sanctioned oil exports flow to Chinese refiners.
“This puts companies in China in a position to comply with either the CCP order or the US order, and either way, there could be consequences,” Meizlish said.
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The issue is expected to be an important topic of discussion at the meeting between the President. Donald Trump and Chinese leader Xi Jinping.
At the same time, diplomacy is also accelerating.
Iranian Foreign Minister Abbas Araghchi arrived in Beijing on Wednesday to meet Chinese Foreign Minister Wang Yi, underlining China’s growing role as both Iran’s primary oil customer and a key diplomatic interlocutor.
Despite increased sanctions and a US naval blockade aimed at restricting Iran’s oil exports, shipments have continued through increasingly transparent maritime networks. Data from maritime intelligence firm Windward shows an increase in ships operating without a tracking signal, with the majority of ships in the Strait of Hormuz recently going “dark”, making inspection significantly more difficult.
According to the report, a recent snapshot showed that 146 of 167 ships in the area were not transmitting location data.
China has ordered companies to ignore US sanctions targeting Iranian oil, forcing Washington to directly test its ability to apply pressure on Tehran.
Windward analysts also found that clandestine loading activities continue at Iran’s main export hub on Kharg Island, including major crude oil carriers operating without tracking signals despite mounting sanctions pressure.
“I don’t expect that to change much in terms of how China helps facilitate.” Evading Iran sanctions“said Meizlish.
These flows have been driven largely by demand from Chinese refiners, particularly smaller independent operators who often operate outside the U.S. financial system and are more insulated from sanctions pressure.
“This is a clear attempt by Beijing to put the ball back in US court and see if it really works,” Meizlish added.
In this photo provided by U.S. Central Command, U.S. forces patrol the Arabian Sea near M/V Touska on April 20, 2026, after opening fire on the Iranian-flagged ship, which the United States accuses of trying to violate the naval blockade of Iranian ports near the Strait of Hormuz.
Beijing’s decision to formally instruct companies not to comply with US sanctions adds a new layer of risk for global companies. The blocking law allows Chinese companies to seek compensation in local courts from banks, insurers or shipping companies that cut ties to comply with U.S. measures.
Analysts say this move could put multinational firms in a difficult position, weighing access to the Chinese market against the risk of being detached from the US financial system.
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“There is no more important facilitator for Iran than China,” Meizlish said.
The standoff underscores a broader challenge for Washington: While sanctions remain a central tool of U.S. foreign policy, they are much more difficult to enforce against major economies like China, especially when transactions can be conducted outside the dollar system.
Fox News Digital has reached out to the Chinese embassy in Washington for comment.
Original article source: China encourages US to apply pressure by ordering companies to ignore US sanctions on Iran
