China Defies US Sanctions on Iran Ahead of Trump-Xi Summit

The Government of China has formally invoked its 2021 blocking rules for the first time, ordering domestic companies and five specific oil refineries—including Hengli Petrochemical (Dalian)—to disregard U.S. sanctions on Iranian petroleum. This directive, issued May 2, 2026, establishes a private right of action allowing sanctioned firms to sue foreign banks or shippers in Chinese courts for complying with U.S. law. The move responds to the Trump administration's "Economic Fury" campaign, which saw the U.S. Treasury blacklist Chinese refiners and the State Department sanction Qingdao Haiye Oil Terminal Co., Ltd. for illicit Iranian oil imports.

Simultaneously, the U.S. has intensified military and financial pressure on Iran. President Donald Trump launched "Project Freedom" to clear a blockade in the Strait of Hormuz, asserting absolute control over the waterway. U.S. Treasury Secretary Scott Bessent accused China of funding the largest state sponsor of terrorism by purchasing 90 percent of Iran's energy, urging Beijing to use its leverage to reopen the strait.

China has rejected these measures as illicit unilateral actions and vetoed a UN Security Council resolution condemning the Hormuz blockade. These escalations occur as President Trump prepares for a summit with President Xi Jinping in Beijing on May 14–15, where the Iran dispute is expected to be a central agenda item. Meanwhile, Iranian Foreign Minister Abbas Araghchi visited Beijing to strengthen ties with Chinese officials.