The “economic onslaught” that Treasury Secretary Scott Bessent has declared on Iran’s financial connections around the world may have one major caveat, says China.
Beijing is Iran’s biggest trading partner and its leading oil buyer. While the U.S. is trying to isolate the Islamic Republic from its remaining economic partners, President Donald Trump is also preparing to host Chinese leader Xi Jinping next month to maintain a fragile trade truce.
Absent from Mr. Bessent’s remarks this week were specifics about how the Trump administration would target China, casting doubts on how effective the new campaign would be when the U.S. must balance putting maximum pressure on Iran and avoiding higher tensions with China that could be costly to the American economy.
“The announcement yesterday was very careful in my view to avoid specifics [against China], which could have led to a disruption in the summit,” Edgard Kagan, senior adviser and Freeman Chair in China studies at the Centre for Strategic and International Studies, said on Tuesday (August 26, 2026).
“For Mr. Xi, a state visit to Washington is a big deal; and for Mr. Trump, hosting it is a big deal.” That means both Washington and Beijing will have a dance to do, said Mr. Kagan, who served as U.S. ambassador to Malaysia from December 2023 until this February.
“I think the real question is, is there room to push [the Chinese] to reduce what they’re doing with Iran, to put more pressure on the Iranian regime in a way that doesn’t lead them to say, ‘This is unreasonable, and we’re not going to comply,’” he said.
China is likely to wait and see and do the minimum
In response to “Operation Economic Outcast,” which Mr. Bessent announced on Monday (August 24), Beijing said its cooperation with Iran has always been “within the framework of international law.” China receives more than 80% of Iranian oil shipments but usually through indirect channels.
Lin Jian, a spokesperson for the Chinese Foreign Ministry, said China-Iran cooperation “should not be disrupted or undermined.” “China is closely monitoring relevant developments and will take all necessary measures to safeguard its own rights and interests resolutely,” Mr. Lin said. He repeated China’s opposition to “illegal unilateral sanctions.” Mr. Kagan described Beijing’s remarks as “a holding response” and said Beijing will try to do the least to comply without openly confronting the U.S..
“They’ve tended to be careful not to cross explicit red lines, but they haven’t addressed the spirit of what the U.S. has sought,” Mr. Kagan said, pointing to practices such as ship-to-ship oil transfers that obscure the origin of Iranian crude oil to evade American sanctions.
Sun Yun, director of the China program at the Stimson Centre, a Washington think tank, said China will not go along with the new campaign if the U.S. goal is to destroy the Iranian economy and seek the government’s collapse.
But “if the goal is to exert enough pressure for Iran to make concessions on the Strait of Hormuz and potentially ending the conflict, I think China can and will demonstrate its cooperation without having to sever ties with Iran completely,” Ms. Sun said.
“China only needs to do enough to demonstrate it is cooperating, such as cut back on its oil imports from Iran.” With a planned summit between Mr. Trump and Mr. Xi weeks away, “neither side wishes to have a major escalation bilaterally at this point,” she said. “China needs to give the US something, and the US needs to understand and accept that it is not going to be everything U.S. asks for.”
U.S. is not likely to act tough on China, analysts say
So far, the Trump administration has refrained from imposing sanctions on major Chinese businesses or banks connected to the U.S. financial system and thus vulnerable to American penalties.
The Treasury Department said on Monday (August 24) that it was penalising nearly 60 Iran-linked entities, accusing them of involvement in Iran’s nuclear and missile programmes, cyber activities and oil shipments.
It targeted a number of entities and individuals based in mainland China and Hong Kong for supporting Iran’s missile and nuclear programs. It sanctioned a China-owned crude oil tanker for transporting millions of barrels of Iranian oil to China this year as well as a Hong Kong-based business for its role in the shadow fleet that ships out Iranian oil.
With Mr. Xi’s visit coming up, Mr. Trump may not act tough on China now, said Ali Wyne, senior research and advocacy adviser on U.S.-China relations at the International Crisis Group.
“Given how keen Mr. Trump has been to maintain both a trade truce between the United States and China and his personal rapport with Mr. Xi, he seems unlikely to do a volte-face just a month before Mr. Xi’s state visit and adopt a highly confrontational posture,” he said.
Plus, Mr. Xi’s visit to the U.S. could pave the way for Mr. Trump to return to China in November for the leaders’ summit of the Asia-Pacific Economic Cooperation grouping.
In his second term, Mr. Trump has been less hawkish on China than in his first term and frequently touts his good relationship with Mr. Xi following a major trade war last year that featured back-and-forth escalating tariffs. The U.S. business community also welcomes Mr. Xi’s visit, saying it’s a good sign if the two leaders meet in person, even when any substantial deals may be elusive.
“Beijing is betting that Washington will be reluctant to jeopardise the current leader-level dynamic by targeting major Chinese entities before the summit,” said Craig Singleton, senior director for China at the Foundation for Defence of Democracies, a hawkish Washington think tank.
Published – August 26, 2026 07:10 am IST
