China Needs U.S. Dollars but Is Building a Hedge Against Washington’s Sanctions
The sanctions target companies and individuals accused of helping Iran evade restrictions, as China vows retaliation and warns of wider financial fallout.
- On Monday, the US announced 'Operation Economic Outcast,' a sanctions package targeting Iran and its trading partners, including Chinese and Hong Kong entities. Treasury Secretary Scott Bessent warned that any entity facilitating "money laundering or sanctions evasion on behalf of Iran risks being cut off from the U.S. financial system."
- Chinese foreign ministry spokesperson Lin Jian dismissed the sanctions on Tuesday as "illicit" with "no basis in international law." Beijing vowed to "take all necessary measures" to protect itself, asserting that cooperation with Iran remains within international legal frameworks.
- Experts told CNBC on Tuesday that removing a major Chinese bank from the SWIFT system would significantly increase devaluation pressure on the yuan, which is "not acceptable" to Beijing. China may use rare earth controls to retaliate against sanctions on major businesses.
- The sanctions development creates a new risk point ahead of the planned summit between President Donald Trump and President Xi Jinping in the US next month. Observers warn this could erode bilateral stability despite ongoing Track 1.5 dialogue efforts.
- Data from Swift shows the yuan currently accounts for 3.1% of global payments, while the US dollar still dominates international finance. China remains incentivized to preserve access to US dollars despite efforts to diversify through its Cross-Border Interbank Payment System.
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Xi Jinping is clearly keen to travel to Washington, but the red line is already flashing.
"The comprehensive strategic partnership between Iran and China is based on mutual respect, mutually beneficial cooperation and a shared vision of a multipolar world," said Iranian parliament president Qalibaf.
The US has urged China to “fall into line” after the country condemned the US sanctions package against Iran. But the Iranian regime is grateful. “We welcome China’s principled statement against the illegal sanctions against Iran,” writes Parliament Speaker Mohammad Bagher Ghalibaf on X.
Negotiations are not a sign of retreat, but of resistance if national interests are served, says Ghalibaf. We must consolidate the gains of the war and avoid polarization, he adds. The post Iran: Ghalibaf's public letter in favor of negotiations with the US – Responds to hardliners appeared first on in.gr.
China is hitting back at the US's new sanctions plans against Iran, warning of violations of international law - and of a new escalation between the world's largest economies.
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