The transactions are carried out bypassing the international banking system, and most of the payments are made using a barter scheme.
In trade with Iran, China bypasses American and other sanctions against Iranian oil and global payment systems, purchasing it practically through barter in exchange for Chinese companies building infrastructure in Iran. The Wall Street Journal writes about this, citing sources.
It is noted that the scheme, similar to barter, works as follows: Iranian oil is delivered to China, the largest client of Tehran, and Chinese companies supported by the Chinese government build infrastructure in Iran.
The scheme involves a large Chinese insurance company, Sinosure, an export credit insurance corporation that is part of Beijing’s global “One Belt, One Road” initiative, and a financial organization called Chuxin, whose activities are strictly classified.
The transactions are reportedly carried out bypassing the international banking system, and most of the payments are made under a barter scheme, when the Iranian side does not receive funds from the sale of oil, and the Chinese government uses the corresponding amounts to finance the construction of infrastructure facilities in Iran.
Last year alone, under such a scheme, about $8.4 billion of Chinese payments for Iranian oil were directed to large infrastructure projects that China is building in Iran.
According to the publication, there is a secret agreement between Beijing and Tehran, according to which China has pledged to invest about $25 billion in infrastructure construction in Iran since the beginning of the century. However, it is not yet known how much money is actually being spent on such projects, although China’s infrastructure work in Iran has increased significantly since 2021.
In addition to channeling oil payments to infrastructure construction, Iran also uses oil revenues to buy Chinese goods and meet domestic consumer demand.
China remains the largest buyer of energy from Iran, importing almost 1.4 million barrels per day in the first half of this year, although it has not reported any purchases of Iranian oil in its official customs statistics since 2022.
According to Kpler, a commodity analyst, about 90% of Iran’s oil exports now go to China, providing a lifeline to Iran’s economy, which has been battered by sanctions.
As a reminder, US President Donald Trump unexpectedly announced his permission for China to purchase Iranian oil, which is mainly supplied to circumvent sanctions by tankers of the “shadow fleet”.
