WANA (Oct 15) – A new report by the Foundation for Defense of Democracies (FDD) reveals that China has built a network of parallel financial and trade systems that have become the core of Iran’s strategy to bypass international sanctions.

 

According to the report, Beijing has designed covert oil-payment mechanisms and barter systems that enable continued trade with Tehran while effectively neutralizing U.S. restrictions.

 

Beijing, the Engine of Sanctioned Iranian Trade

For years, China has been the largest buyer of Iranian oil and sanctioned goods, accounting for roughly 90% of Iran’s crude exports and 25% of its non-oil trade.

 

However, the financial logistics behind this trade have long remained opaque—especially after major Chinese banks scaled back transactions with Iran out of fear of secondary U.S. sanctions.


Two Pillars of Iran’s Sanctions-Evasion Network

Drawing on recent reports from The Wall Street Journal and Bloomberg (published October 5, 2025), the FDD identified two key components underpinning Iran’s sanction-evasion strategy:

 

A secret oil-payment system tied to Chinese infrastructure projects
A sophisticated barter network linking Iran’s metals and automotive sectors

 

Together, these mechanisms illustrate how China is quietly constructing a shadow financial architecture that allows Iran to keep exporting oil and importing critical goods outside U.S. oversight.

 

China’s Hidden Oil Payment Network

The Wall Street Journal uncovered a covert payment architecture that channels billions of dollars from Beijing to Tehran for crude oil purchases—entirely outside the U.S.-led financial system.

 

At the center of this scheme is Chuxin, an obscure financial entity not listed among China’s officially registered banks.

 

China’s Customs Reports Over 3 Tons of Gold Exported to Iran in Early 2025

WANA (Oct 05) – According to official data from China’s General Administration of Customs, Iran imported more than 3 tons of gold from China during the first five months of 2025.   Detailed trade figures show that in just the first two months of the year (January and February 2025), Iran purchased around 2.25 tons […]

 

Under this structure, companies connected to sanctioned oil traders ship Iranian crude to China. Chinese buyers then transfer payments to Chuxin, which in turn funnels the money to Chinese contractors working on infrastructure projects in Iran—projects insured by the same state-owned enterprise that sponsors the oil deals.

 

Western officials estimate that in 2024 alone, around $8.4 billion in oil-related payments flowed through this network, funding construction projects ranging from airports and refineries to transport systems. The model closely mirrors China’s “oil-for-loan” arrangements in Iraq, where long-term crude supplies serve as collateral for Beijing-backed development loans.

 

Analysts say this could explain the rise in Iran’s external debt despite sanctions, as Tehran may be pledging future oil revenues in exchange for Chinese credit lines.


Car-for-Metal Barter: Trade Without Banks

Bloomberg reports that in parallel, major Chinese automakers and metals companies—particularly Chery Automobile and the Tongling Nonferrous Metals Group—have built a barter-based trading system with Iran to bypass conventional banking channels.

 

In this arrangement, Chinese firms export semi-assembled car parts to Iran, where local manufacturers complete the vehicles. Instead of cash payments, the Chinese companies receive shipments of Iranian copper and zinc, which Tongling and other intermediaries then resell on the global market.

 

Automakers including Dongfeng, Chery, and JAC are all reported to have active partnerships with Iranian manufacturers.

 

Although small compared to China’s $19 billion in total exports to Iran between April 2024 and March 2025, several hundred million dollars’ worth of barter trade demonstrates the growing fragmentation of the global financial order. Regional Chinese firms and provincial state-owned enterprises, particularly in industrial hubs, appear to be actively facilitating the circumvention of U.S. sanctions.

 

Iran–China Automotive Cooperation Unaffected by the Snapback Mechanism

WANA (Oct 08) – With the activation of the UN “snapback” mechanism and the reimposition of sanctions against Iran, concerns have emerged about potential impacts on the country’s automotive industry and the possibility of Chinese companies exiting the Iranian market. However, a review of official UN Security Council documents and expert analyses indicates that such […]

 

A New Shadow Economy

Analysts argue that China is expanding a “shadow financial infrastructure” that could eventually allow not only Iran but also other sanctioned nations to sustain trade without dependence on the dollar-based system.

 

This evolution, they warn, signals the gradual emergence of an alternative economic network—one where the yuan and commodity barter increasingly replace the U.S. dollar in parts of global commerce.