What the latest US financial threats against Iran mean for China
The United States has threatened Iran with ‘the greatest financial offensive ever marshaled,’ with sanctions targeting Tehran's trading partners. China, as the biggest buyer of Iranian oil, is a key focus of any effort to squeeze Tehran's economy.
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The most important trade link between China and Iran is oil.
There have been sanctions that the U.S. has imposed on China's Iranian oil consumption,
but they have not actually stopped volumes of Iranian oil from reaching China.
What has had an impact, frankly, is the recent blockade.
The U.S. has sanctioned Tehran and its oil trade for years, and China has largely disregarded
that.
Now, there are some nuances to that.
China is the biggest buyer of Iranian oil, but its big state oil companies don't buy
Iranian oil, so what China has been buying has been purchased by the independent refiners
known as teapots.
Over the years, the U.S. has imposed sanctions, specifically, selectively, against small refiners.
If China is indeed targeted by fresh measures, we have seen in the recent past quite a bit
of tit-for-tat retaliation between China and the U.S.
There has been a trade war between the two countries, so presumably, if passed as prologue,
there would be some sort of retaliation.
What is interesting contextually is that exactly a month from now, Chinese President Xi Jinping
is due to visit Washington, and so it is an awkward time to impose fresh sanctions on
China at this moment.