Iran and China Use Secret Barter System to Bypass Sanctions

The Government of Iran and the Government of China have implemented a secretive barter-like trade mechanism to circumvent United States sanctions on Iranian oil sales. Under this arrangement, Iranian oil is exchanged for credits that Iran uses to purchase billions of dollars in Chinese goods, including air defense systems, vehicles, medicines, and communication equipment.

The system utilizes a special purpose vehicle and a China-based financial entity called ChuXin to move funds outside of international banking channels, shielding Chinese companies from scrutiny. Reports indicate that between $2 billion and $2.5 billion flowed through the special purpose vehicle over the last year. The National Iranian Oil Company is linked to Hong Kong-registered firms used to facilitate these transactions, while the Chinese state-owned trader Zhuhai Zhenrong allegedly deposited hundreds of millions of dollars monthly to cover Iranian purchases.

In response to Iran's nuclear program, the United States has maintained a naval blockade in the Strait of Hormuz and intensified economic pressure. Secretary of the Treasury Scott Bessent warned countries to sever business ties with Iran or risk exclusion from the dollar-based financial system. While the Chinese foreign ministry denied familiarity with the specific barter arrangement, it stated that China opposes unilateral sanctions that lack United Nations Security Council authorization.