China faces a major dilemma after the United States threatened to cut\noff access to the US financial system for parties that help Iran evade\nsanctions.<\/p>\n
On one hand, China still heavily relies on the US dollar to support\nglobal trade, but on the other, Beijing has begun strengthening\nalternative financial systems to reduce the risk of pressure from\nWashington.<\/p>\n
US Treasury Secretary Scott Bessent said entities that facilitate\nmoney laundering or sanctions evasion on behalf of Iran risk losing\naccess to the US financial system.<\/p>\n
\u201cIf they facilitate transactions and become part of the ecosystem\nthat turns Iranian oil into money, into a tool of oppression, then they\nwill be targeted,\u201d Bessent said when asked about Chinese banks, as\nquoted by CNBC International on Wednesday (26\/8\/2026).<\/p>\n
China responded by stating it would take necessary steps to protect\nits interests. A spokesperson for China\u2019s Ministry of Foreign Affairs\nreiterated Beijing\u2019s rejection of unilateral sanctions that it considers\nto have no basis in international law or mandate from the UN Security\nCouncil.<\/p>\n
The dilemma arises because China is the largest buyer of Iranian oil.\nData from Kpler cited by Reuters shows China purchases more than 80% of\nIranian oil shipped by sea, making the trade relationship between the\ntwo countries a key factor in the effectiveness of Washington\u2019s economic\npressure campaign.<\/p>\n
Through \u201cOperation Economic Outcast\u201d, President Donald Trump\u2019s\nadministration has expanded pressure on Iran\u2019s economic network while\nwarning other countries to halt business ties with Tehran. However,\nWashington has so far not imposed sanctions on China\u2019s largest financial\ninstitutions linked to Iranian oil trade.<\/p>\n
Amid these threats, China retains a strong interest in maintaining\naccess to the US dollar system. The dollar remains the primary currency\nin international trade and finance, so cutting off access for major\nChinese banks could place significant pressure on the country\u2019s economic\nand trade activity.<\/p>\n
However, China has also long been building protection against such\nrisks. The Cross-Border Interbank Payment System (CIPS) has become one\ninstrument to reduce dependence on dollar-centric financial\ninfrastructure, although that does not mean Beijing wants to completely\nabandon the US currency.<\/p>\n
Peter Alexander, managing director of Shanghai-based advisory firm\nZ-Ben, said the development of the system is a form of financial\ndiversification for China.<\/p>\n
\u201cThis is a geopolitical hedging instrument,\u201d Alexander said,\ndescribing CIPS as one way Beijing is preparing for possible financial\npressure from Washington.<\/p>\n
Tianchen Xu, senior economist at The Economist Intelligence Unit,\nsaid dollar dominance makes cutting off access a double-edged sword.<\/p>\n
\u201cChina clearly wants to remain in the dollar system that benefits its\ntrade engine, but that does not mean it will do everything to comply\nwith ever-expanding US sanctions,\u201d he said.<\/p>\n
\u201cBeijing has not even begun to take a hard line against America,\u201d\nAlexander said, adding that the main issue ahead is not just what\nWashington can do, but whether the US will actually take action that\nrisks shaking the economic relationship between the two countries.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/china-faces-dilemma-us-dollar-or-helping-iran-1787755905", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }