China warns US it could retaliate over Iran sanctions

Beijing says it will take ‘all necessary measures’ if Washington expands crackdown on business with Tehran

Beijing has warned the US that it will retaliate if Chinese companies are included in any significant expansion of the Trump administration’s new secondary sanctions relating to Iran.

The measures unveiled on Monday by US Treasury secretary Scott Bessent targeted companies based in Hong Kong and mainland China but stopped short of listing large Chinese financial institutions.

Any serious increase in US sanctions on China, which buys 90 per cent of Iran’s oil, would risk exploding the relationship only a month before presidents Donald Trump and Xi Jinping are scheduled to meet in Washington.

The summit is seen as crucial to the world economy, with the leaders expected to discuss extending a one-year truce in their trade war that they agreed in October and which was cemented by a cordial visit to Beijing by Trump in May.

“China will take all necessary measures to firmly safeguard its rights and interests,” a Chinese foreign ministry spokesperson said on Tuesday in response to questions about US secondary sanctions on Iran.

“China has made clear on many occasions its firm opposition to illicit unilateral sanctions that have no basis in international law or the authorisation of the UN Security Council,” they said.

“The pressing task is to facilitate de-escalation of the situation and return to dialogue and negotiation as soon as possible,” they added.

While China’s large state-owned refiners largely comply with sanctions on Iranian crude, Beijing allows private sector refiners known as “teapots” to import and process oil from the country.

The US imposed sanctions on some of these refiners earlier this year but China ordered domestic companies not to comply.

China has set up an increasingly strident anti-sanctions regime that includes countermeasures against foreign individuals and organisations that assist with foreign restrictions on Chinese companies and supply chains.

Any attempt by the US to aggressively expand a secondary sanctions regime on Iran to Chinese companies would risk retaliation from Beijing, which last year showed that it could bring American manufacturing to a standstill through its control of critical minerals essential to high-tech production.

“We have to wait and see whether this is just bluffing or [the US is] seriously thinking about putting secondary sanctions on China,” said Wang Dong, a senior scholar at Peking University.

“If they do, then of course China will absolutely defend its national interest . . . we already did that during round one last year,” he added.

He said Washington was trying to “shift responsibility on to others and blame China for its own failure”.

But Zhu Feng, an international relations expert at Nanjing University, said that behind the scenes, China was deeply interested in encouraging the warring parties in the US-Iran conflict to find a solution.

He noted that the continued restrictions on shipping through the crucial Strait of Hormuz due to the conflict are straining the entire global economy.

“From a Chinese perspective, we don’t want to get involved in a US-Iranian fight,” he said. “On the other hand, we are also very highly aware that if the Strait of Hormuz dilemma continues, it will also be more dangerous for China. China’s main oil imports come from the Middle East, not from Iran but from Saudi Arabia and Iraq.”

In recent days, Xi has met King Abdullah II of Jordan while foreign minister Wang Yi has met his Kuwaiti counterpart, with Iran and the war in Gaza discussed in both meetings.

“So China’s message to Tehran is very clear — we hope the peace talks will continue,” said Zhu.

Well, we’d all like to see peace talks. With the US and Israel actually sticking to their agreements. Before the global economy is completely sunk