Secret Financing and Trade Corridor Established Between Iran and China
Bypassing U.S. sanctions, Iran and China have implemented a $2.5 billion alternative trade mechanism that bypasses the international banking system.
Despite international U.S. sanctions, a secret $2.5 billion financing and trade corridor bypassing the international banking system has been established between Iran and China. Tehran continues its imports by converting the revenues generated from oil sales into credit.
Formation of the Alternative Financing Corridor
U.S. sanctions, rather than cutting off trade between Iran and China, have led to the creation of an alternative financing corridor between the two countries. Tehran sells its oil to China and converts the revenue generated into credit that can be used to purchase goods and services from China, instead of receiving direct payments.
Thanks to this method, Iran continues its imports without interruption, without needing the international banking system.
Military Supply and Official Statements
It is stated that the system is not limited to commercial goods alone. According to sources reached by Reuters, the mechanism was used at least once in contracts linked to the supply of millions of dollars worth of air defense equipment to Iran over the past year.
Following these developments, the Chinese Foreign Ministry publicly announced that it was unaware of the financing and trade mechanism in question.
Operational Mechanism of the Money Flow
A buyer acting on behalf of the Chinese state-owned oil company Zhuhai Zhenrong deposited hundreds of millions of dollars a month into a financial institution named ChuXin. These funds were then transferred to Chinese exporters and companies working on infrastructure projects in Iran.
Sources state that approximately 70 percent of Iranian oil revenues passing through this mechanism were directed toward infrastructure projects, while the remaining portion was used for payments to companies selling goods.
Financial Volume and Unregistered Structures
It is estimated that a money flow ranging between $2 billion and $2.5 billion took place through special-purpose vehicles over the past year. However, it is noted that some financial institutions and structures playing a role in this process could not be verified in official company records in China.
This structure, containing unregistered elements, highlights the extent of the flexible financial methods developed by the two countries against sanctions.
Economic Advantages Provided for Both Countries
This established arrangement provides significant economic advantages for both parties. While Iran trades without directly needing the dollar and the international banking system, China maintains uninterrupted access to sanctioned Iranian oil.
According to Kpler data, China purchased more than 80 percent of Iran's seaborne oil exports in 2025, averaging 1.4 million barrels per day.
Trade Items and Strategic Partnership
Products imported by Iran from China include pharmaceuticals, vehicles, and various communications equipment. It is stated that a significant portion of the producers do not trade directly with Iran, and therefore there is no concrete indicator that they have violated sanctions.
This structure reveals a new dimension of the 25-year strategic partnership agreement signed by China and Iran in 2021, covering many sectors, primarily energy and infrastructure.