China warns US of retaliation over expansion of Iran sanctions

On Tuesday, China issued a stern warning to the United States, stating it might retaliate if Washington extends its sanctions against Iran to include Chinese companies. This warning emerged after US Treasury Secretary Scott Bessent announced additional measures to isolate Iran and penalize nations continuing trade with Tehran. The Financial Times reported that Beijing had advised against any substantial extension of secondary sanctions to Chinese firms, emphasizing China's opposition to unilateral sanctions without UN Security Council authorization.

The spokesperson called for a de-escalation and a return to negotiations regarding the US-Iran conflict. The latest US sanctions targeted 60 individuals, companies, and vessels, including entities in mainland China and Hong Kong. However, major Chinese banks, believed to facilitate Iranian oil trade, were not among those hit. The news of potential sanctions on Chinese companies is particularly sensitive, as China is the primary buyer of Iranian crude, purchasing around 90% of Iran's oil exports.

China's major state-owned refiners typically avoid sanctioned Iranian crude, but private refiners continue to buy it. However, since the US renewed its blockade of Iranian ports in mid-July, Iranian shipments to China have significantly decreased. The prospect of sanctions against major Chinese companies could complicate relations between Washington and Beijing, especially as US President Donald Trump is scheduled to meet Chinese President Xi Jinping in Washington.

China has also established a robust legal framework to retaliate against foreign sanctions and restrictions affecting Chinese businesses. The stakes for the US are significant, as China dominates the supply of several critical minerals crucial to American manufacturers and hi-tech industries. Beijing is also keen on preventing the Iran conflict from further disrupting Middle Eastern energy supplies, as China relies heavily on Saudi Arabia and Iraq for oil.